Shri Sharad Mishra Vs ITO (ITAT Lucknow)

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Brief of the case:

  • The ITAT Lucknow in the case of Sharad Mishra vs. ITO held that the arrival of assessee in India at night cannot be treated as his stay for the complete day. Thus, the actual hours of the day stayed only could be counted as stay in India on that day.
  • Therefore, the arrival of assessee at 9:10PM cannot be considered as stay of one clear day.

Facts of the case:

  • The assessee filed its return declaring salary income with a refund claim of TDS of Rs 2,66, 000/-The refund was claimed for the salary income exemption to non-resident u/s 10 , though inadvertently in return the assessee claimed status as resident.
  • The AO examined the case and concluded that total stay in India was of 182 days therefore, his residential status is of resident and the income earned by him is chargeable to tax in India.
  • The CIT (A) reversed the order of AO and held that the day on which assessee arrived at India in night at 9:00 PM cannot be termed as his stay in India for that day.

Contention of the Assessee:

  • On 25/10/2008, the assessee was arrived at India at 9:10 PM from Honkong, accordingly stay was only for less than 3 hours on that day which cannot be treated as stay of one day.
  • The reliance was placed on the judgement of Walkie vs. IRC [1952] wherein the court held that where a person is in India only for a part of a day, the calculation of physical presence in India in respect of such broken period should be made on an hourly basis.
  • Thus, the total period of stay was 181 days and remaining hours of 25/10/2008(i.e. 3hrs approx.).

Contention of the Revenue:

  • The period of stay includes the full day of arriving or/and leaving the India irrespective of actual stay time for that day.
  • Further, the assessee himself claimed to have been resident for the relevant assessment year.
  • Therefore, the order of CIT(A) allowing exemption ignoring the fact that the assessee had himself claimed his status as resident in the return of income was erroneous

Decision of the ITAT:

  • The point if dispute is as to the one clear day whether the assessee was present in India or he was in India for few hours.(on 25/10/2008)
  • The assessee was in India on 25/10/2008 is only for less than three hours. Thus, the date 25/10/2008 cannot be treated as complete day and should be excluded while computing the number of days in India. Such exclusion would make assessee’s stay in India less than 182 days(i.e. his period of stay only 181 days+ 3 hours-approx of 25/10/2008)
  • Thus, ITAT concurred with the case of Walkie vs. IRC [1952] relied upon by the assessee.
  • Therefore, the assessee was eligible for exemption being a non-resident. In result , appeal of revenue was dismissed

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