Income-tax Act, 1961 — Section 6(1)(c) and Explanation to S. 6(1) — In the case of an assessee who is sent on deputation by his Indian employer to a company outside India and his salary is borne and paid by the foreign company, can it be said that the ass

DCIT vs. Ashok Kumar

A.Y. : 2004-2005. Date of Order : 6.3.2009

Income-tax Act, 1961 — Section 6(1)(c) and Explanation to
S. 6(1) — In the case of an assessee who is sent on deputation by his Indian
employer to a company outside India and his salary is borne and paid by the
foreign company, can it be said that the assessee has left India for the
purpose of employment and therefore his case is covered by clause (a) of
Explanation to S. 6(1) — Held : Yes.

 

Facts :

The assessee was an employee of ONGC. During the previous
year relevant to assessment year 2004-05, he was seconded to ONGC Nile Ganga
BV, a Dutch company. During the year under consideration his stay in India was
for 98 days. The AO held that in view of S. 6(1)(c) of the Act the assessee
became resident and accordingly he charged to tax salary received by the
assessee from ONGC Nile Ganga in Sudan. The AO held that the assessee did not
leave India for employment outside India but was sent for work of ONGC out of
India and, therefore, his income was chargeable to tax.

The CIT(A) held the assessee to be a non-resident and
directed the AO to exclude salary received by the assessee from ONGC Nile
Ganga by treating the assessee as a non-resident.

The Revenue filed an appeal to the Tribunal.

Held :

The Tribunal noted that during the period when the assessee
was deputed to ONGC Nile Ganga no salary was paid by ONGC. It held that since
ONGC Nile Ganga B.V. is a foreign company, a separate entity, the assessee can
be said to have left India but joined employment in a foreign country and,
therefore, the condition for treating him as resident would be for 180 days (sic
182 days) as against 60 days provided in the Explanation. Accordingly, it
held that the assessee was a non-resident and therefore, income received by
him from ONGC Nile Ganga in Sudan would not be taxable. It noted that this
view was also supported by the decision of AAR in the case of British Gas
India P. Ltd. (285 ITR 218). The Tribunal dismissed the appeal of the Revenue.