Basab Mukherjee, Jalpaiguri vs Department Of Income Tax on 13 May, 2013 (Income Tax Appellate Tribunal - Kolkata)
Posted on October 01 2020
आयकर अपीलीय अधीकरण, Ûयायपीठ - "B" कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH: KOLKATA
(सम¢)Before ौी के. के. गूƯा, लेखा सदःय एवं/and ौी महावीर िसंह, Ûयायीक सदःय)
[Before Shri K. K. Gupta, AM & Shri Mahavir Singh, JM]
आयकर अपील संÉया / I.T.A No. 09/Kol/2012
िनधॉरण वषॅ/Assessment Year: 2006-07
Income-tax Officer, Wd-1(1), Jalpaiguri Vs. Shri Basab Mukherjee
Date of hearing: 13.05.2013
Date of pronouncement: 13.05.2013
For the Appellant: Shri K. N. Jana, Sr. DR
For the Respondent: Shri A. K. Chakraborty, Advocate
Per Shri Mahavir Singh, JM:
This appeal by revenue is arising out of order of CIT(A), Jalpaiguri in Appeal No. 656/CIT(A)/JAL/08-09 dated 26.09.2011. Assessment was framed by ITO, Ward-1(1), Jalpaiguri u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for Assessment Year 2006-07 vide his order dated 31.12.2008.
2. This appeal by revenue is time barred by 8 days and revenue has filed condonation petition. When this was confronted to Ld. counsel for the assessee, he fairly conceded that he has no objection in case the delay is condoned. Since Ld. counsel for the assessee is not contesting the reasons given by revenue in its condonation petition, we condone the delay and admit the appeal.
3. The only issue in this appeal of revenue is against the order of CIT(A) deleting the addition made by AO on account of receipt of salary treated by assessee as exempt u/s. 10(6)(vii) of the Act. For this, revenue has raised following ground:
"The Ld. CIT(A), Jalpaiguri has deleted the addition of Rs.12,34,980/- on account of receipt of salary by the assessee treating the same as exempt u/s. 10(6)(vii). The amount of tax involved is Rs.3,59,594/- and as such appeal is preferred in this case."
Basab Mukherjee AY : 2006-07
4. We have heard rival submissions and gone through facts and circumstances of the case.
Briefly stated facts are that the assessee, an Engineer, during the previous year 2005-06 relevant to AY 2006-07 was in service with two vessels namely, (i) MV APJ SUSHMA having its office at Kolkata and other MV OCEAN SENANG under the management of Executive Ship Management PTE Ltd. The assessee enclosed Form No. 16 issued by his employers namely, (i) M/s. Surrender Overseas Ltd. of Apeejay Group in the vessel MV APJ SUSHMA based in Kolkata and (ii) Executive Ship Management PTE Ltd., of Singapore MV Ocean Senang along with the return of income. The assessee's case was selected for scrutiny under CASS system. According to assessee, during his service period while in Indian vessel, he was 130 days outside Indian territorial water and 100 days in foreign vessel in other territorial water. According to him, assessee was outside Indian territory for 230 days and so he claimed his income as exempt claiming residential status as 'Non-Resident'. The AO while completing assessment treated the assessee as "Resident". For doing so, AO opined that 130 days claimed by assessee as outside Indian territorial water, being Indian vessel , as deemed to be in India and accordingly, he charged the income of the assessee under the I. T. Act by opining on the basis of meaning of section 2(25A) of the Act as amended byFinance Act, 2007 wr.e.f. 25.08.1976.
5. Aggrieved, assessee preferred appeal before CIT(A), who treated the status of assessee as "Non-Resident" in view of CBDT Circular no. 586 dated 28.11.1999 and also following the decision of Hon'ble Madras High Court in the case of CIT Vs. ICL Shipping Ltd. (2009) 315 ITR 195 (Mad). CIT(A) decided the issue as under:
"I have carefully considered the submission of the Assessee and also perused the assessment order. I have a1so gone through the Circular No. 586 dated 28.11.1999. The relevant part of the Circular reads -
"After the amendment made in Section 6 of the Income-tax Act, 1961 by the Finance Act, 1990, w.e.f. 01.04.1990, an Indian Cítizen who is a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 is regarded as a resident in India only if he is in India for 182 days or more during the relevant year irrespective of the extent of his stay in India in earlier years. For this purpose, it is necessary to note that the term India as defined in section 2(25A) of the Income-tax Act, 1961 does not extend to Indian ships operating beyond Indian territorial waters. However, if he is outside India and comes on a visit to India in any year, and leaves India otherwise than as a member of the crew of an Indian ship he will be regarded as a resident of India if his stay in India during that year is for 150 days or more if during the 4 years preceding that year he has been in India for 365 days or more.".
Basab Mukherjee AY : 2006-07 In my opinion, even after the amendment of the provisions of Sec.2(25A) of the I T Act, the new definition of ' India' cannot change the context of the aforesaid Circu1ar. In view of the above fact, it is held that the submission made by the assessee has force and the assessee cannot be treated as a 'resident'. In this connection, the ratio of the decision in CIT vs ICL Shipping Ltd(2009) 315 ITR 195 (Mad) can also be referred to."
Aggrieved, revenue is now in appeal before us.
6. We find that the facts are undisputed. The only issue now to be considered by us is whether those 130 days when assessee was in Indian vessel but it was outside Indian territorial water and also was in foreign vessel in foreign territorial water, the assessee will be treated as 'Non-Resident' in such situation. First of all, we have to go though the definition in it as provided in the Act i.e. section 2(25A), which reads as under:
"2(25A). India" means the territory of India as referred to in article 1 of the Constitution, its territorial waters, seabed and subsoil underlying such waters, continental shelf, exclusive economic zone or any other maritime zone as referred to in the Territorial Waters, Continental Shelf, Exclusive Economic Zone and other Maritime Zones Act, 1976 (80 of 1976), and the air space above its territory and territorial waters;"
The section before retrospective amendment by Finance Act, 2007, with retrospective effect from 25.08.1976 referred to geographical limits for the jurisdiction. It is now made clear that it will include territorial waters, continental shelf, exclusive economic zone or other maritime zones as referred in Territorial waters, Continental Shelf, Exclusive Economic Zone or other Maritime Zones Act, 1976 besides air space above its territory and territorial waters. We find that CIT(A) has relied on Circular No. 586 dated 28.11.1999 and the relevant para of Circular reads as under:
"2. After the amendment made in section 6 of the Income-tax Act, 1961, by theFinance Act, 1990, w.e.f. 1.4.1990, an Indian citizen who is a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958, is regarded as a resident in India only if he is in India for 182 days or more during the relevant year irrespective of the extent of his stay in India in earlier years. For this purpose, it is necessary to note that the term "India" as defined in section 2(25A) of the Income-tax Act, 1961, does not extend to Indian ships operating beyond Indian territorial waters. However, if he is outside India and comes on a visit to India in any year, and leaves India otherwise than as a member of the crew of an Indian Ship, he will be regarded as a resident in India if his stay in India during that year is for 150 days or more if during the four years preceding that year he has been in India for 365 days or more."
Further, Hon'ble Madras High Court in ICL Shipping Ltd., supra has also held as under:
"On a reading of sections 2(30), 2(42) and 6 together, for a person to claim the status of a " non-resident" has only to satisfy that though such person as a crew works for anBasab Mukherjee AY : 2006-07 Indian shipping company rendered such service for the said company in the ship outside the territorial waters of India for a period exceeding 182 days. For that purpose, it would be relevant to extract sections 2(30),2(42) and Explanation to section 6, which reads as under:
" 2.(30) ` non-resident' means a person who is not a ` resident' and for the purposes of sections 92, 93 and 168, includes a person who is not ordinarily resident within the meaning of clause (6) of section 6 ;
2.(42) ` resident' means a person who is resident in India within the meaning of section 6;
6. For the purposes of this Act,-
(1) An individual is said to be resident in India in any previous year, if he-
(a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or . . .
(c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.
Explanation.-In the case of an individual,-
(a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words ` sixty days' , occurring therein, the words ` one hundred and eighty-two days' had been substituted."
Having regard to the said specific statutory provisions providing for the benefit of grant of exemption for a non-resident, we are convinced that in the case on hand having regard to the fact that the crew with reference to whom the exemption was availed of and who offered their services outside the territorial waters for an Indian shipping company, the period of which exceeded 182 days, there was no scope to find fault with the action of the Indian shipping company in not having deducted any tax at source in respect of the salary paid to such crew for the relevant period."
7. Similarly, in CIT v. Indo Oceanic Shipping Co. Ltd. [(2001) 247 ITR 247, 259 (Bom)], it has been held that the above said circular No. 586 though in the context of deductions in the hands of employees, specifically lays down that, India, as defined under section 2(25A) of the Income-tax Act, does not extend to Indian ships operating beyond Indian territorial waters. The circular to the above extent, supports our interpretation that Indian ships operating beyond Indian territorial waters do not come within the term 'India' as defined in section 2(25A). The above said circular No. 586 has been relied upon in CIT v. Avtar Singh Wadhwan (2001) 247 ITR 260 (Bom). Applying Basab Mukherjee AY : 2006-07 the above said circular No. 586, dated 28.11.1990, the Bombay Bench of this tribunal has, in A.L Fernandes v. ITO [(2002) 75 TTJ (Bom) 714(TM)], observed thus:
"15. In view of the above, the Indian members of the crew of foreign-going Indian ship would be non-resident in India if they rendered services on the board of such ship outside the territorial waters of India for 182 days or more during that year. The circular of CBDT, therefore, mitigated the hardship and removed the disparity."
In the present case before us, the facts are clear that assessee for 100 days was in foreign vessel in other territorial water and for 130 days he was outside the Indian territorial water i.e. he was outside Indian territory for 230 days and the requirement of section 6 for being outside India for 182 days, he become 'non-resident'. Accordingly, we confirm the order of CIT(A) and the appeal of revenue is dismissed.
8. In the result, appeal of revenue is dismissed.
9. Order pronounced in the open court.
के . के . गूƯा, लेखा सदःय महावीर िसंह, Ûयायीक सदःय
(K. K. Gupta) (Mahavir Singh)
Accountant Member Judicial Member
तारȣख) Dated : 13th May, 2013
वǐरƵ िनǔज सिचव Jd.(Sr.P.S.)
Basab Mukherjee AY : 2006-07
आदे श कȧ ूितिलǒप अमेǒषतः- Copy of the order forwarded to:
1. अपीलाथȸ/APPELLANT - ITO,Ward-1(1), Jalpaiguri 2 ू×यथȸ/ Respondent - Shri Basab Mukherjee, College Para, P.O. Kharia, Jalpaiguri.
3. आयकर किमशनर (अपील)/ The CIT(A), Jalpaiguri
4. आयकर किमशनर/ CIT Jalpaiguri
5. ǒवभािगय ूितनीधी / DR, Kolkata Benches, Kolkata
स×याǒपत ूित/True Copy, आदे शानुसार/ By order,
सहायक पंजीकार/Asstt. Registrar.