Assessee needn’t be unemployed while going abroad for a job; only stay in India would determine his residential status

Where status of assessee was a non-resident, fact that assessee was already employed before leaving India should not affect his residential status

Facts:

a) The assessee working in Whirlpool China filed his return of income and declared taxable income under the head 'salary'. During scrutiny assessment, he pleaded that he was out of India for 236 days and he was not liable to be taxed in India as he was non-resident during the relevant financial year;

b) The Assessing Officer did not accept the assessee's contention and made the assessment on ground that assessee was already employed in Whirlpool India prior to leaving India;

c) On appeal, the CIT(A) held that the assessee’s salary was not taxable in India. The aggrieved revenue filed the instant appeal.

The Tribunal held as in favour of assessee as under:

1) Section 6(1) read with the Explanation provides that for an individual, who has left India for employment outside India, should be treated as resident of India only if he was in India during the relevant year for 182 days or more (Anurag Chaudhary, In re (2010) 190 Taxman 296 (AAR-New Delhi));

2) A careful reading of such Explanation would show that the requirement of the Explanation is not leaving India for employment but it is leaving India for the purposes of employment outside India. For the purpose of the Explanation, an individual need not be an unemployed person who leaves India for employment outside India (British Gas India (P) Ltd. In re (2006) 155 Taxman 326 (AAR-New Delhi))

3) During the relevant financial year, the assessee's stay in India was of less than 182 days and, thus, his residential status was non-resident;

4) The assessee’s contention, that he was already employed in the Whirlpool India prior to the leaving India for working with Whirlpool China, would not affect his residential status. Therefore, the order of the CIT(A) stating that salary income of the assessee accrued and arose during his employment in China and was not taxable in India was to be upheld - ACIT V. RAJ JAIN (2013) 38 taxmann.com 133 (Delhi- Trib.)