Section 6(6)

Section 6(6) — the law in short

What the courts have decided on section 6(6), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• CIT v. N. Sundarraman (Madras High Court) — deposits funded by convertible foreign exchange routed through NRE accounts later redesignated as NRNR keep the s.115E rate, and a wrong 'resident' description in the return does not alter the assessee's real status High CourtHelps taxpayer
  My client remitted his overseas salary into NRE accounts, later had them redesignated as NRNR deposits, and described himself as 'Resident' in his return by mistake while claiming section 115H. The assessing officer says he is a resident, that no valid section 115H declaration was filed with the return, and has denied the twenty per cent rate. Is there anything in this?
  Yes, on two grounds the Madras High Court accepted. First, on the facts found by the Tribunal the redesignation of the NRE accounts into NRNR accounts had been made only out of the convertible foreign exchange lying to the assessee's credit in accounts opened with the inflow of the original foreign exchange transferred to India as approved by the Reserve Bank of India, so the deposits remained foreign exchange assets. Second, the Court held that the assessee's real status cannot be denied merely because he made a wrong declaration when he satisfied all the conditions, and that being 'not ordinarily resident' he was not a 'resident' and so fell within the definition of non-resident Indian in section 115C(e) and was entitled to section 115E in its own right, with no obligation to file any declaration under section 115H.
• Sameer Malhotra v ACIT ITATHelps taxpayer
  I moved to Singapore with my family. Can the AO's tie-breaker questionnaire alone make me an Indian resident?
  No. A tie-breaker questionnaire is an important aid but cannot be the exclusive basis for the conclusion, and permanence of a home is assessed qualitatively as well as by duration, so a flat taken on rent abroad can be a permanent home. The Tribunal decided the tie-breaker principally on the centre of vital interests - the assessee had moved to Singapore with his family to earn there, so his personal and economic relations for that period were in Singapore - with habitual abode offered as an additional reason. The addition of global income was deleted and the Assessing Officer directed to accept the revised return.
• Hari Gopal Chopra v CIT Advance RulingHelps taxpayerNo later treatment found
  I have come back to India after seven years working abroad and my NRNR rupee deposits and foreign currency deposits are still running. Do the non-resident concessions stop the day I become resident, and when is the interest taxed?
  No, they do not stop automatically. The Authority ruled that Hari Gopal Chopra, who returned to India on 24 May 1996 after employment in Zambia, remained entitled to the Chapter XII-A benefits under s.115H after becoming resident, provided he filed the written declaration that section requires with his return. It also ruled that interest on his non-resident non-repatriable rupee deposits was taxable only in the year the deposits matured, because nothing had been credited to his account before then, and that interest on his foreign currency deposits with a scheduled bank was exempt under s.10(15)(iv)(fa) for assessment year 1997-98 and later years for which he was found resident but not ordinarily resident. The ruling binds only the applicant.
• Statutory position — ss.41 and 43 of the Black Money Act and s.72(c): the penalty of three times the tax computed under s.10, the Rs 10 lakh penalty for not reporting a foreign asset in the return with its twenty lakh rupee proviso from 1 October 2024, and the deemed year of acquisition for an asset acquired before commencement CBDT Circulars & InstructionsCuts both ways
  My client's Black Money assessment covers a foreign account opened in 2009 and not declared under the one-time compliance window. The department has charged tax and a penalty of three times the tax, and says the year is fixed by s.72(c). What do those provisions actually say?
  Section 41 provides that the Assessing Officer may direct that, in a case where tax has been computed under s.10 in respect of undisclosed foreign income and asset, the assessee shall pay by way of penalty, in addition to tax if any payable by him, "a sum equal to three times the tax computed under that section". It is therefore a multiple of the tax computed under s.10, and it follows the s.10 computation — if the computation goes, the base of the penalty goes with it. Section 43 is a different and smaller penalty: where a resident other than not ordinarily resident within s.6(6) of the Income-tax Act has furnished a return under s.139(1), (4) or (5) of that Act and fails to furnish any information, or furnishes inaccurate particulars, in that return relating to any asset (including financial interest in any entity) located outside India held by him as beneficial owner or otherwise, or in respect of which he was a beneficiary, or relating to any income from a source located outside India, the Assessing Officer "may direct that such person shall pay, by way of penalty, a sum of ten lakh rupees". Its proviso, as substituted by the Finance (No. 2) Act, 2024 with effect from 1 October 2024, reads: "Provided that this section shall not apply in respect of an asset or assets (other than immovable property), where the aggregate value of such asset or assets does not exceed twenty lakh rupees." The footnote on the departmental page records that before that substitution the proviso excluded only "an asset, being one or more bank accounts having an aggregate balance which does not exceed a value equivalent to five hundred thousand rupees at any time during the previous year". Section 72(c), in the removal-of-doubts provision at the end of the declaration chapter, is the hinge of the retrospectivity argument and reads: "where any asset has been acquired or made prior to commencement of this Act, and no declaration in respect of such asset is made under this Chapter, such asset shall be deemed to have been acquired or made in the year in which a notice under section 10 is issued by the Assessing Officer and the provisions of this Act shall apply accordingly".
• CBDT Press Release 02.02.2020 on residence CBDT Circulars & InstructionsHelps taxpayerSuperseded by amendment
  I work in the Gulf and pay no tax there. Does the deemed residence rule tax my foreign salary?
  No. The Board clarified that the provision is an anti-abuse measure aimed at Indian citizens who shift their stay to a low or no-tax jurisdiction, not at bona fide workers abroad, and that income earned outside India is not taxed here unless it is derived from a business controlled in, or a profession set up in, India.
• Statutory position — s.6(2) and s.6(6)(b): an HUF is resident unless control and management is situated WHOLLY outside India, and the not-ordinarily-resident test looks to the manager CBDT Circulars & InstructionsCuts both ways
  The karta of my client's HUF has lived in Dubai for years and all the family's decisions are taken there, but one property is managed from India by his brother. The Assessing Officer says the HUF is resident in India. On what test?
  On the test in s.6(2): a Hindu undivided family, firm or other association of persons is said to be resident in India in any previous year in every case EXCEPT where during that year the control and management of its affairs is situated wholly outside India. The word that decides the case is "wholly". Any part of the control and management of the family's affairs being situated in India during the previous year makes the family resident. If the family is resident, s.6(6)(b) then asks whether it is "not ordinarily resident": it is, if its MANAGER has been a non-resident in India in nine out of the ten previous years preceding that year, or has during the seven previous years preceding that year been in India for 729 days or less.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.