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ITAT Mumbai judgement on whether employment includes self employment for the purpose of determining residential status

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ITAT Mumbai judgement on whether employment includes self employment for the purpose of determining residential status

ACIT Vs Nishant Kanodia (ITA No. 2155/Mum./2023)

Facts:
1. The assessee, being an individual, was in India for a total period of 176 days. As per the assessee during the year, he had left India for the purpose of employment with Firstland Holdings Ltd., Mauritius. The assessee was appointed as Strategist – Global Investment in Mauritius.

2. The assessee claimed his residential status to be “Non–Resident” and accordingly did not offer his global income to tax in India. In this regard, the assessee has placed reliance on Explanation– 1(a) to section 6(1) of the Income Tax Act and submitted that since during the year, the assessee has left India for the purpose of employment in Mauritius, therefore while determining the residential status, the period of 60 days as per section 6(1)(c) shall be substituted with 182 days as per Explanation–1(a) of section 6(1).

3. On the contrary, as per the Revenue, the assessee left India not for the purpose of employment but he left India as an Investor on a business visa to Mauritius, therefore Explanation–1(a) of section 6(1) is not applicable as so he is a resident of India and global income should hence be taxable in India.

ITAT Mumbai held as under:
1. No technical meaning is intended for the word “employment” used in the Explanation. In our view, going abroad for the purpose of employment only means that the visit and stay abroad should not be for other purposes such as a tourist, or for medical treatment or for studies or the like.

2. Going abroad for the purpose of employment therefore means going abroad to take up employment or any avocation as referred to in the Circular 346 dated 30/06/1982, which takes in self-employment like business or profession.

3. So much so, in our view, taking up own business by the assessee abroad satisfies the condition of going abroad for the purpose of employment covered by Explanation (a) to section 6(1)(c) of the Act. Therefore, we hold that the Tribunal has rightly held that for the purpose of the Explanation, employment includes self-employment like business or profession taken up by the assessee abroad.