1. Facts of the Case
John is a foreign citizen, and he is not a person of Indian origin (PIO). He has been visiting India every year since 1990, spending 99 days each year, typically in the month of May. The assessment in question relates to the Assessment Year (AY) 2014–15, which corresponds to the Previous Year (PY) 2013–14. The objective is to determine whether John qualifies as a resident or non-resident under the Income Tax Act, 1961, for the specified assessment year.
2. Issues in the Case
- What are the relevant legal provisions under the Income Tax Act, 1961, that govern the determination of an individual’s residential status?
- Does John’s repeated 99-day annual visit to India make him a resident or non-resident for AY 2014–15?
- If he qualifies as a resident, does he fall under the category of Resident and Ordinarily Resident (ROR) or Resident but Not Ordinarily Resident (RNOR)?
3. Legal Principles Covered
Under Section 6(1) of the Income Tax Act, 1961, an individual is considered a Resident in India if:
- He is in India for 182 days or more during the relevant previous year, or
- He is in India for 60 days or more in the relevant previous year and 365 days or more during the four preceding previous years.
In John’s case, being a foreign citizen and not a PIO, no exceptions apply to extend the 60-day limit to 182 days. Therefore, the standard rule of 60 days plus 365 days applies.
In addition, Section 6(6) provides the criteria for distinguishing between Resident and Ordinarily Resident (ROR) and Resident but Not Ordinarily Resident (RNOR):
To be considered a ROR, both of the following must be fulfilled:
- The individual must have been a resident in at least 2 out of the 10 preceding previous years; and
- The individual must have been in India for 730 days or more in the 7 preceding previous years.
If either of the above conditions is not met, the individual is considered RNOR.
4. Possible Judgement
Applying the above principles to John’s case:
- During PY 2013–14, John was in India for 99 days — satisfying the 60-day requirement.
- During the 4 years preceding that (2009–10 to 2012–13), John spent 99 days per year, totaling 396 days, satisfying the 365-day condition.
- Therefore, he qualifies as a Resident under Section 6(1) for AY 2014–15.
However, for determining whether he is a ROR or RNOR:
- In the 7 preceding years (2006–07 to 2012–13), he stayed for 693 days (99 days × 7 years), which is less than 730 days, and hence fails this condition.
- As such, he cannot be considered Resident and Ordinarily Resident.
Thus, John is categorized as a Resident but Not Ordinarily Resident (RNOR) for AY 2014–15.
This status implies that only:
- Income received or accrued in India, or
- Income deemed to be received in India,
will be taxable in his hands in India.
