In the case of Tapas Kumar Basak v. Assistant Director of Income Tax, International Taxation-II & Ors., the petitioner, Tapas Kumar Basak, challenged an order by the Director of Income Tax (International Taxation) in Kolkata that treated him as a “Resident” for having stayed in India for 182 days during the relevant previous year under Section 6(1)(a) of the Income Tax Act, 1961. The petitioner argued that his status should have been considered “Non-Resident” and that his salary should have been exempt based on Circular No. 586 from 1990 which applies to crew members.
According to the Income Tax Act, 1961 (“the IT Act”), a person’s residential status is determined based on the number of days they stay in India during the relevant previous year. Section 6(1)(a) of the IT Act states that an individual is considered a resident in India if they have stayed in India for a period of 182 days or more during the relevant previous year. In this case, the Assessing Officer determined that the petitioner had stayed in India for 182 days during the relevant previous year and thus, brought his entire salary of Rs. 12,26,822/- under the tax net as the global income of a resident, which is taxable.
However, the petitioner argued that his status should have been considered “Non-Resident” and that his salary should have been exempt based on Circular No. 586 from 1990 which applies to crew members. The circular provides that if a crew member stays on foreign water for a total period of 184 days or more during the financial year relevant to the assessment year, their residential status should be considered as “Non-Resident” and their salary should be treated as exempt.
The Hon’ble Calcutta High Court noted that the petitioner did not file any reply to the notice under Section 148 of the Income Tax Act and did not challenge the said notice before the court. He also did not file any application for rectification under Section 154 of the IT Act for the assessment under Section 147/144 of the IT Act by which the petitioner was held as “Resident”. Moreover, he did not file any appeal before the Commissioner of Income Tax (Appeals) against the aforementioned assessment order, even though it was appealable.
Furthermore, the evidence by way of the certificate of his employer upon which the petitioner wants to rely for his period of stay in question on foreign water was never produced or filed either before the Assessing Officer or before the Commissioner of Income Tax during the impugned proceeding under Section 264 of the IT Act. In this proceeding, the Commissioner of Income Tax upheld the order of the assessment under Section 147/144 of the IT Act treating the petitioner as a “Resident”. For the first time, the petitioner has produced the aforementioned certificate issued by his employer in this writ proceeding and wants this writ court to appreciate and consider it.
Additionally, the court found that the circulars/notifications the petitioner relied on were in conflict with Section 6(1) of the Income Tax Act, and that in such a case, the Act prevails.
Therefore, the Calcutta High Court upheld the assessment order and confirmed the petitioner’s status as a “Resident.”
Seek Help from Tax Consultant for ITR filing of NRI
As a tax consultant, we can assist Non-Resident Indians (NRIs) in filing their income tax return. We can help NRIs navigate the complex tax laws and regulations specific to NRIs, and ensure that the return is filed accurately and on time.
Here are a few ways we, as tax consultants in Gurgaon, can assist an NRI in filing their income tax return:
- Provide guidance on determining the NRI’s residential status for the financial year for which the return is being filed. This is important as it determines the taxability of income earned by the NRI.
- Review and analyze the NRI’s income and expenses to ensure that all eligible deductions and exemptions are claimed.
- Prepare and file the return online using the e-filing portal of the Income Tax Department of India.
- Provide advice on tax planning and structuring of investments to minimize the NRI’s tax liability.
- Represent the NRI in case of any queries or notices from the Income Tax Department.
- Help in filing returns for NRI’s assets outside of India like bank accounts, properties, shares, etc.
As a tax consultants, we can provide expert assistance to NRIs throughout the income tax return filing process, helping them to comply with all the applicable laws and regulations and minimize their tax liability.
Here are a few steps that can be followed to file an income tax return as an NRI:
- Gather all the necessary documents such as Form 16 (if applicable), bank statements, investment proofs, and rental income details.
- Determine the residential status for the financial year for which the return is being filed. This is important as it determines the taxability of income earned by the NRI.
- File the return online using the e-filing portal of the Income Tax Department of India. The NRI can either file the return themselves or through a tax professional.
- If the NRI has taxable income, they need to pay taxes as per the applicable tax rate.
- After the return is filed, the NRI should keep a copy of the acknowledgment for their records.
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