I left India to run my own business abroad, not for a job. Do I get the 182-day test?
Yes. Explanation 1(a) to s.6(1) is not confined to salaried employment — leaving India to carry on business or a profession abroad falls within it. With a stay of 176 days in India, below 182, the assessee was a non-resident and the Revenue's appeal was dismissed.
Decided by the ITAT (Income Tax Appellate Tribunal, Mumbai Bench 'B' — Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) (order delivered by Karhail, JM)) on 2024-01-08, reported as [2024] 158 taxmann.com 262 / 205 ITD 20 (Mum.)(Trib.); IT Appeal No. 2155/Mum/2023 with Cross Objection No. 115/Mum/2023. It bears on section 6, section 6(1), section 153A, section 5 of the Income Tax Act 1961, in Residence & Treaty Benefit matters.
It answers the standard objection that a person who leaves as an investor on a business visa has not left 'for the purposes of employment outside India'. The answer does not turn on a fresh reading of the words: the Tribunal adopted the Kerala High Court's construction in O. Abdul Razak, under which 'employment' carries no technical meaning and covers self-employment, business or a profession taken up abroad, the provision excluding only departures as a tourist, for medical treatment or for studies - a construction that rests on the Board's own circular of 30 June 1982 and on the Memorandum explaining the Finance Bill. That pedigree is what makes it hard for an officer to answer. The point decides the case wherever the stay in India falls between 60 and 182 days.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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A search under s.132 and survey under s.133A were carried out on 10 May 2018 in the group to which the assessee belonged; a notice under s.153A issued on 30 December 2019 and the return filed on 28 January 2020 declared Rs. 23,61,660 for assessment year 2013-14. The assessee claimed non-resident status: he had stayed in India for 176 days during the previous year and had gone to Mauritius, where he had been appointed by Firstland Holdings Ltd. as 'Strategist - Global Investment' for three years at USD 1,00,000 per month plus benefits, with duties covering business development in India, the United States, Africa and the Middle East, raising money from investors and raising equity for new projects. He was on that company's payroll from August 2012 to March 2013 and had filed Mauritius returns declaring MUR 2,44,48,000 and MUR 1,65,12,353 with tax deducted. The occupation permit seized in the search described him as an investor, not an employee, and he held the whole of the company's shares. The Assessing Officer held him resident under s.6(1)(c) and added offshore income of Rs. 28,14,64,628, being USD 51,75,000, treating the appointment letter and salary slips as self-serving. The Commissioner (Appeals) reversed that by order dated 28 March 2023 and the revenue appealed. That the assessee had been in India for 365 days or more in the four preceding years was not in dispute.
The revenue's appeal was dismissed and the assessee's non-resident status upheld; nothing was remanded. Even accepting that the assessee went to Mauritius as an investor in a company in which he held all the shares, he was entitled to the extended period of 182 days in Explanation 1(a) to s.6(1), and his stay of 176 days being less than that, his claim to non-resident status was correct. The assessee's cross objection was dismissed as academic and infructuous.
The Tribunal framed the sole question as whether the assessee left India for the purposes of employment outside India, because if he did, the 60-day limb in s.6(1)(c) is read as 182 days. It did not construe the words afresh. It adopted the Kerala High Court's construction in O. Abdul Razak, which reads the expression with the Board's circular of 30 June 1982 and the Memorandum explaining the Finance Bill: no technical meaning attaches to 'employment', going abroad for employment includes going abroad to take up self-employment such as a business or profession, and what the provision excludes is going abroad as a tourist, for medical treatment or for studies. It noted three coordinate-Bench decisions to the same effect. Applying that ratio, the Tribunal held that even accepting the assessee went to Mauritius as an investor in a company he wholly owned, he was entitled to the extended period of 182 days, and on a stay of 176 days he was a non-resident. The evidence it recorded on the way included the appointment as 'Strategist - Global Investment', the payroll entries and the Mauritius returns on which tax had been deducted, against which the revenue relied on the occupation permit, the business visa and the whole shareholding.
Accordingly, even if it is accepted that the assessee went to Mauritius as an Investor in Firstland Holdings Ltd., Mauritius, in which he holds 100% shareholding, we are of the considered view that by applying the ratio of aforesaid decisions the assessee is entitled to claim the benefit of the extended period of 182 days, as provided in Explanation-1(a) to section 6(1) of the Act, for the determination of residential status.
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Handle my notice → Ask a CA on WhatsAppYes. Explanation 1(a) to s.6(1) is not confined to salaried employment — leaving India to carry on business or a profession abroad falls within it. With a stay of 176 days in India, below 182, the assessee was a non-resident and the Revenue's appeal was dismissed. This was decided by the ITAT (Income Tax Appellate Tribunal, Mumbai Bench 'B' — Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) (order delivered by Karhail, JM)) and bears on section 6, section 6(1), section 153A, section 5 of the Income Tax Act 1961. It is reported as [2024] 158 taxmann.com 262 / 205 ITD 20 (Mum.)(Trib.); IT Appeal No. 2155/Mum/2023 with Cross Objection No. 115/Mum/2023. It answers the standard objection that a person who leaves as an investor on a business visa has not left 'for the purposes of employment outside India'. The answer does not turn on a fresh reading of the words: the Tribunal adopted the Kerala High Court's construction in O. Abdul Razak, under which 'employment' carries no technical meaning and covers self-employment, business or a profession taken up abroad, the provision excluding only departures as a tourist, for medical treatment or for studies - a construction that rests on the Board's own circular of 30 June 1982 and on the Memorandum explaining the Finance Bill. That pedigree is what makes it hard for an officer to answer. The point decides the case wherever the stay in India falls between 60 and 182 days. If it applies to you, the first step is this: Count the days of stay in India precisely for the previous year and check whether the figure falls between 60 and 182.
A search under s.132 and survey under s.133A were carried out on 10 May 2018 in the group to which the assessee belonged; a notice under s.153A issued on 30 December 2019 and the return filed on 28 January 2020 declared Rs. 23,61,660 for assessment year 2013-14. The assessee claimed non-resident status: he had stayed in India for 176 days during the previous year and had gone to Mauritius, where he had been appointed by Firstland Holdings Ltd. as 'Strategist - Global Investment' for three years at USD 1,00,000 per month plus benefits, with duties covering business development in India, the United States, Africa and the Middle East, raising money from investors and raising equity for new projects. He was on that company's payroll from August 2012 to March 2013 and had filed Mauritius returns declaring MUR 2,44,48,000 and MUR 1,65,12,353 with tax deducted. The occupation permit seized in the search described him as an investor, not an employee, and he held the whole of the company's shares. The Assessing Officer held him resident under s.6(1)(c) and added offshore income of Rs. 28,14,64,628, being USD 51,75,000, treating the appointment letter and salary slips as self-serving. The Commissioner (Appeals) reversed that by order dated 28 March 2023 and the revenue appealed. That the assessee had been in India for 365 days or more in the four preceding years was not in dispute. The matter was decided on 2024-01-08 by the ITAT (Income Tax Appellate Tribunal, Mumbai Bench 'B' — Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) (order delivered by Karhail, JM)). On those facts the ITAT held as follows. The revenue's appeal was dismissed and the assessee's non-resident status upheld; nothing was remanded. Even accepting that the assessee went to Mauritius as an investor in a company in which he held all the shares, he was entitled to the extended period of 182 days in Explanation 1(a) to s.6(1), and his stay of 176 days being less than that, his claim to non-resident status was correct. The assessee's cross objection was dismissed as academic and infructuous.
The Tribunal framed the sole question as whether the assessee left India for the purposes of employment outside India, because if he did, the 60-day limb in s.6(1)(c) is read as 182 days. It did not construe the words afresh. It adopted the Kerala High Court's construction in O. Abdul Razak, which reads the expression with the Board's circular of 30 June 1982 and the Memorandum explaining the Finance Bill: no technical meaning attaches to 'employment', going abroad for employment includes going abroad to take up self-employment such as a business or profession, and what the provision excludes is going abroad as a tourist, for medical treatment or for studies. It noted three coordinate-Bench decisions to the same effect. Applying that ratio, the Tribunal held that even accepting the assessee went to Mauritius as an investor in a company he wholly owned, he was entitled to the extended period of 182 days, and on a stay of 176 days he was a non-resident. The evidence it recorded on the way included the appointment as 'Strategist - Global Investment', the payroll entries and the Mauritius returns on which tax had been deducted, against which the revenue relied on the occupation permit, the business visa and the whole shareholding. In the words reproduced by the source cited on this page: "Accordingly, even if it is accepted that the assessee went to Mauritius as an Investor in Firstland Holdings Ltd., Mauritius, in which he holds 100% shareholding, we are of the considered view that by applying the ratio of aforesaid decisions the assessee is entitled to claim the benefit of the extended period of 182 days, as provided in Explanation-1(a) to section 6(1) of the Act, for the determination of residential status."
It was decided by the ITAT on 2024-01-08 and is reported as [2024] 158 taxmann.com 262 / 205 ITD 20 (Mum.)(Trib.); IT Appeal No. 2155/Mum/2023 with Cross Objection No. 115/Mum/2023. Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 6, section 6(1), section 153A, section 5, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. The revenue's appeal was dismissed and the assessee's non-resident status upheld; nothing was remanded. Even accepting that the assessee went to Mauritius as an investor in a company in which he held all the shares, he was entitled to the extended period of 182 days in Explanation 1(a) to s.6(1), and his stay of 176 days being less than that, his claim to non-resident status was correct. The assessee's cross objection was dismissed as academic and infructuous. It arises in Residence & Treaty Benefit matters, on section 6, section 6(1), section 153A, section 5 of the Income Tax Act 1961, and was decided by Income Tax Appellate Tribunal, Mumbai Bench 'B' — Prashant Maharishi (Accountant Member) and Sandeep Singh Karhail (Judicial Member) (order delivered by Karhail, JM). Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Evidence the economic occupation carried on abroad — the entity, the shareholding, the activity actually undertaken — rather than relying on the visa category. Do not concede that investor status or a business visa takes the assessee outside Explanation 1(a).
Still good law. Two later Tribunal decisions name, cite and apply it, and both were read in full. Sanjay Bhaskar v. Dy. CIT [2026] 182 taxmann.com 66 (Del.)(Trib.), 30 December 2025, holds at its para 16 that under identical circumstances the Mumbai Bench in this case had so held, reproduces paras 12 to 15 of it, and at para 17 concludes that the assessee before it was non-resident because he was out of India for the purpose of employment. Raghav Agarwalla v. ITO (International Taxation) [2024] 169 taxmann.com 252 (Mum.)(Trib.), 21 October 2024, reproduces paras 9 to 14 of this order at its para 4.1 and applies Explanation 1(a) on that footing, although it remands for verification of the facts. No decision doubting, distinguishing or reversing it was found, and no appeal to a High Court appears on the record. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Section 6(1A) is a provision inserted after the year in issue, so this order decides the residence test only and an Indian citizen with Indian-source income above the threshold who is not liable to tax in the destination country has to be checked against that provision separately. The order was read in full - 18 numbered paragraphs - and the facts, the reasoning and the quoted sentence now come from it; the date of order is 8 January 2024, not the 18 January 2024 previously printed here, which was a news report's own publication date. One correction to how the reasoning read before: the Tribunal did not construe 'for the purposes of employment outside India' from the text. It adopted the Kerala High Court's construction in O. Abdul Razak, which rests on the Board's circular of 30 June 1982 and on the Memorandum explaining the Finance Bill, and noted three coordinate-Bench decisions to the same effect. The matter also included a cross objection by the assessee, dismissed as academic. This entry covers the person working abroad and not the seafarer half of the question; the sourced authority there is CBDT Circular No. 13/2017 dated 11 April 2017, which clarifies that salary accrued to a non-resident seafarer for services rendered outside India on a foreign ship is not included in total income merely because it has been credited to an NRE account with an Indian bank, read with s.5(2)(a). The order does not decide anything about s.6(1A). It also does not say what evidence would suffice where there is no appointment letter, no payroll and no foreign tax return to produce - the finding here rested on all three. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The revenue's appeal was dismissed and the assessee's non-resident status upheld; nothing was remanded. Even accepting that the assessee went to Mauritius as an investor in a company in which he held all the shares, he was entitled to the extended period of 182 days in Explanation 1(a) to s.6(1), and his stay of 176 days being less than that, his claim to non-resident status was correct. The assessee's cross objection was dismissed as academic and infructuous.
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