Section 6

Section 6 — the law in short

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

• Sumana Bandyopadhyay v DDIT High CourtHelps taxpayer
  The AO taxed my foreign salary because it landed in my Indian NRE account. Can he do that if I am a non-resident?
  No. Salary that became due and accrued to a non-resident for services rendered outside India does not become chargeable on a receipt basis merely because the foreign employer paid it into an Indian NRE account. Income accrues where the services are rendered, not where the money is banked, and the High Court allowed the appeal and answered the question in the assessee's favour.
• CIT v Suresh Nanda High CourtHelps taxpayerValidity unconfirmed
  My passport was seized and I could not leave India. Do those days count towards the 182 days?
  No, where the stay was involuntary and the seizure itself was found to be wrongful. The Delhi High Court upheld the Tribunal and held that the period for which a citizen is in India against his will, brought about by executive action later found to be without authority of law, must be excluded in calculating the period under s.6(1)(a). The test it laid down is one of animus: there must be something to show that the individual intended, or had the animus, of residing in India for the minimum prescribed duration. The Court added that this is not a thumb rule - each case has to be examined on its own facts.
• DIT v Manoj Kumar Reddy Nare High CourtHelps taxpayer
  I work abroad on deputation and came back to India for a few weeks. Do those days count against me under the 60-day test?
  No, on these facts. The Karnataka High Court declined to interfere with a concurrent finding that, excluding the time during which the assessee was visiting India, he was not in India for the requisite 60 days, so he was a non-resident and could not be taxed as a resident under s.6(1)(c). The Revenue's appeal was dismissed for want of a substantial question of law.
• DCIT v M. Mahadevan ITATHelps department
  The Assessing Officer has computed my days in India from immigration records instead of the stamps in my passport. Can he go behind the passport like that?
  Yes, on this decision. The Chennai Bench of the Tribunal upheld the officer's reliance on data of the Foreigners Regional Registration Office in preference to passport stamps, holding that the agency is mandated to keep data of entry and exit on a real-time basis and that, being a Central Government agency, its data cannot be suspected or doubted. It also held that the burden lies on the assessee to prove by demonstrative evidence that his case falls outside section 6, and that having overseas business and travelling does not by itself put him outside Indian tax. A tax residency certificate from the UAE, obtained in 2021 for earlier years, did not displace the domestic computation.
• Saket Kanoi v DCIT ITATHelps taxpayerValidity unconfirmed
  The officer says my client pays no tax in Dubai, so the India-UAE agreement cannot apply to him. Is that right?
  No. The Delhi Tribunal held that a resident of the UAE is entitled to the benefit of the India-UAE agreement even though the UAE levies no tax on him. Being 'liable to tax' in a Contracting State does not require that tax was actually paid; it is enough that the State has the right to tax, whether or not the right is exercised. The Assessing Officer's reasoning that there was no double taxation, so no relief was due, was rejected.
• Ashok Kumar Pandey v ACIT ITATHelps department
  I am resident in both India and the US. Which country wins under the treaty tie-breaker?
  India, on these facts. A permanent home being available in both countries, the Tribunal went to the centre of vital interests and held that personal and economic relations taken together pointed to India — spouse and children here, and active involvement in an Indian company as against passive US holdings. The US-source income was accordingly taxable in India.
• ACIT v Nishant Kanodia ITATHelps taxpayer
  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.
• Petition No. 7 of 1995, In re ITATHelps departmentValidity unconfirmed
  I flew out of India in October. Does the day I left count as a day of stay in India for the 182-day test, and does a part-day count?
  Yes, on this ruling - and the day of arrival counts too. The Authority for Advance Rulings, working out whether the applicant was resident under section 6(1)(a), held that for that purpose the days on which he entered India as well as the days on which he left India have to be taken into account. An argument that the stay should instead be computed in hours was put aside as impractical, and in any event no data had been furnished from which an hours-based figure could be worked out. Counting both days made the applicant resident, and the application was rejected as not maintainable.
• Vance Robert Heffern v CIT Advance RulingHelps taxpayerSuperseded by amendment
  Our US employer has seconded a telecom manager to India and is bearing his Indian tax. He has no formal technical qualification and cannot produce his certificates. Can he still be a technician for the s.10(5B) exemption?
  Yes, on the law as it then stood. The Authority ruled that Vance Robert Heffern, seconded by ALLTEL Information Services International Holding Inc. to its group company in India as a telecom manager, qualified as a technician under s.10(5B), and that the taxes borne by his employer were exempt for forty-eight months from his arrival in India. Neither his inability to produce educational certificates nor the absence of technical education was a disqualification, because specialised knowledge may be obtained either by education or by special experience; his fourteen years in the ALLTEL group and the work he was doing in India fell within the notified field of information technology. Section 10(5B) has since been deleted from the Act.
• In re Cyril Eugene Pereira Advance RulingHelps departmentSuperseded by amendment
  I live and work in the UAE, where individuals pay no income tax. Can I claim the India-UAE treaty on my Indian dividends, interest and capital gains?
  No, on the Authority's 1999 view. It ruled that the applicant, permanently resident in Abu Dhabi, could not be treated as a resident of the UAE under article 4 of the India-UAE agreement, because article 4(1) requires liability to tax in that State and the UAE imposes no income tax on individuals. It followed that he could not claim the reduced rates on dividends and interest under articles 10(2)(b) and 11(2)(b), and that the capital gains protection in article 13(3) was unavailable, so the gains remained taxable in India under domestic law. The reasoning has not survived; the ruling bound only the applicant.
• CBDT Circular 2/2021 CBDT Circulars & InstructionsHelps departmentValidity unconfirmed
  I was stranded in India by the COVID flight ban in FY 2020-21. Am I resident now?
  There is no blanket relief, but the Board did not refuse one either. On the representations for a relaxation of the day count for previous year 2020-21, the Board concluded that on the Act read with the tax treaties there does not appear to be a possibility of double taxation for that year, and it reserved the relaxation question: individuals who are in fact being taxed twice were asked to furnish the information in Form-NR by 31 March 2021, and the Board said that after understanding those situations it would examine whether any relaxation is required and, if it is, whether a general relaxation can be given for a class of individuals or a specific one in individual cases. Along the way the circular sets out the day-count thresholds for the year, and makes the point that an individual who became resident because of exceptional circumstances would most likely be not ordinarily resident.
• CBDT Circular 13/2017 on seafarer salary in an NRE account CBDT Circulars & InstructionsHelps taxpayer
  My client is a non-resident seafarer and his foreign employer credits his salary straight into his Indian NRE account. Is that receipt in India?
  No. The Board clarified 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 maintained with an Indian bank. Under s.5(2)(a) only income received or deemed to be received in India is taxable for a non-resident, and the Board treats the credit into the NRE account as not making the salary income received in India.

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.