1. Facts of the Case
- John is a foreign citizen and not a person of Indian origin (PIO).
- He has been visiting India every year since 1990.
- Each year, he stays in India for 99 days, and these visits occur only during the month of May.
- The analysis is for the Assessment Year (AY) 2014–15, which corresponds to the Financial Year (FY) 2013–14.
- The question is whether John qualifies as a Resident or Non-Resident under the Income Tax Act, 1961 for AY 2014–15.
2. Issues in the Case (Questions)
- What is the residential status of John for the Assessment Year 2014–15 under Section 6 of the Income Tax Act, 1961?
- Whether John’s annual stay of 99 days, consistently over the years, makes him a resident or non-resident?
- Does the fact that John is neither an Indian citizen nor a person of Indian origin influence the conditions for determining his residential status?
3. Legal Principles Covered to Support Case Proceedings and Judgements
Section 6(1) of the Income Tax Act, 1961 – Residential Status
An individual is Resident in India in a financial year if they satisfy either of the following basic conditions:
- (a) They are in India for 182 days or more during the relevant previous year,
OR - (b) They are in India for 60 days or more during the previous year and have been in India for 365 days or more during the four preceding previous years.
Exception for Indian citizens or Persons of Indian Origin (PIOs):
- The 60-day condition in clause (b) is extended to 182 days for Indian citizens or PIOs who come to India on a visit.
- However, this exception does not apply to John, as he is neither an Indian citizen nor a PIO.
Application to John:
- For FY 2013–14, John was in India for 99 days.
- In the four preceding years, he would have been in India for 99 days × 4 = 396 days, satisfying the second condition’s 365-day requirement.
So, to qualify as a resident under Section 6(1)(b), John must:
- Be in India for at least 60 days in FY 2013–14 (✓ Yes: 99 days), and
- Be in India for 365 days or more in the preceding 4 years (✓ Yes: 396 days)
Hence, both conditions under Section 6(1)(b) are satisfied.
Section 6(6) – Resident and Ordinarily Resident (ROR) vs. Resident but Not Ordinarily Resident (RNOR):
An individual who is a resident under Section 6(1) is considered “Resident and Ordinarily Resident (ROR)” only if:
- They have been a resident in India in at least 2 out of the 10 preceding previous years, and
- Have stayed in India for at least 730 days in the 7 preceding previous years.
John visits India only 99 days per year. Over 7 years:
99 × 7 = 693 days (less than 730 days)
Thus, he fails the second condition and will be treated as Resident but Not Ordinarily Resident (RNOR) if at all he qualifies as a resident.
4. Possible Judgement
Conclusion on Residential Status:
- John was in India for 99 days in FY 2013–14, and for 396 days in the 4 years preceding—satisfying Section 6(1)(b).
- Since John is neither an Indian citizen nor a person of Indian origin, the 60-day requirement is not relaxed, and is fully applicable.
- Therefore, for the Assessment Year 2014–15, John is classified as a Resident under the Income Tax Act, 1961.
However, because John has not spent 730 days in India in the preceding 7 years, he does not qualify as “Resident and Ordinarily Resident”.
Final Judgement:
For the Assessment Year 2014–15, John shall be treated as a “Resident but Not Ordinarily Resident (RNOR)” under the Income Tax Act, 1961.
