The client is an Indian citizen, 31, who worked for a company in Hyderabad until 13 October 2023, resigned, and joined an employer in Dubai on 22 October 2023 on a two-year contract; his wife and child followed in January 2024. His travel record for FY 2023-24 is: in India from 1 April, out of India from 24 June to 19 July on interviews and house-hunting, out of India from 13 October, and back in India from 15 to 29 March 2024. The officer's count of his stay is 186 days. The client's own count, taken by excluding the day he arrived on each leg and also the day he departed, is 181. Excluding only the arrival days it is 184. His Indian salary for the year was Rs 14.2 lakh and his Indian interest and dividend income Rs 1.4 lakh; his Dubai salary from October to March was about Rs 65 lakh, credited to a UAE account, of which Rs 21 lakh was remitted to an NRE account in India and shows in the annual information statement. He filed as a non-resident, offering only the Indian income. The assessment order under s.143(3) dated 12 March 2026 holds him resident and ordinarily resident, adds the whole Dubai salary and charges interest for the advance tax shortfall. He obtained no tax residency certificate from the UAE authorities for FY 2023-24 and left Schedule FA blank.
Rebuild the day count from the passport before touching anything else, and be honest with the client about what it produces. The whole case is one day. On the convention the library supports - the day of arrival excluded - the count is 184 and he is resident under the first limb, because that limb reads 'one hundred and eighty-two days or more'. To get to 181 he needs the day of departure excluded as well, and there is no sourced authority for that in this library and no High Court ruling on either half. Everything else in the reply is second line. A submission that opens on the employment carve-out, or on the account the money was paid into, tells the officer that the day count has been given up, and the day count is the only ground on which this client wins outright.
Residence under the first limb is a bright-line count, so the convention decides the charge before any computation begins. The library holds a Tribunal order that while counting days of stay for the purpose of the resident tests the day of arrival has to be excluded, taken by the route that where a period runs from a day that day is left out, and following two earlier orders to the same effect; on those facts the department's figure of 184 fell below 182 once the arrival days came out. Apply it here and the officer's 186 becomes 184. Also ask the officer to state his convention in writing, because a dispute about method can be answered and a bare total cannot.
This is the most common misreading on both sides of the file. Explanation 1(a) substitutes 182 days for 60 days, and 60 days appears only in the second test - the one that combines a stay in the year with 365 days across the four preceding years. It does nothing at all for a person who is already over 182 days in the year itself. So on the officer's count and on the arrival-day count it is irrelevant. On a count of 181 it becomes decisive, because the client plainly satisfies the four-year limb and only the carve-out keeps him out of it. Frame it that way: conditional, and only after the arithmetic. Its width is not in doubt - the library holds a Tribunal order rejecting the argument that a person who left as an investor on a business visa had not left for the purposes of employment, on the footing that the expression describes the purpose of the departure and there is no warrant for distinguishing working for another from working for oneself - and this client has an actual contract of employment, which is the plainest case for it.
Residence and the scope of the charge are two different questions answered by two different sections, and the middle status is where a departing employee usually hopes to land. He does not land there. A resident is not ordinarily resident only if he was a non-resident in nine of the ten preceding years, or in India for 729 days or less in the seven preceding years, and this client lived and worked in India throughout. If he is resident he is ordinarily resident, and the third limb of the charging section brings in income accruing outside India whatever its source. The proviso that keeps foreign salary out operates only for the not-ordinarily-resident, so it is unavailable. Say this in the file note rather than discovering it at the hearing, because it is what makes the day count worth fighting.
The officer's fallback where a day count is lost is that an Indian citizen whose total income other than income from foreign sources exceeds Rs 15 lakh is deemed resident if he is not liable to tax in any other country by reason of domicile, residence or any similar criterion - which describes a Gulf posting on its face. This client's Indian income is Rs 15.6 lakh, so he is over the threshold. The answer the library supplies is that deeming a person resident does not enlarge what is taxable: the provision that fixes the not-ordinarily-resident status expressly covers a person deemed resident under it, and the proviso to the charging section then keeps ordinary foreign income - salary for services rendered abroad, foreign interest, foreign dividends - outside the net. The Board said as much when the measure was announced, describing it as directed at citizens who shift their stay to a low or no-tax jurisdiction and not at people genuinely working abroad.
The Rs 21 lakh that came into the NRE account is the visible half of the officer's case and often the whole of it, because it is the only foreign figure he can see. The library holds a High Court decision that salary which 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, and the credit is the remittance of income already earned, not the point at which it arises. Put the contract, the wage account statement and the remittance advices on record to show where the obligation arose and was discharged. The argument that works is about accrual; the argument that the account has a particular label is not an argument.
The circular is short and does one thing: 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 was credited to an NRE account with an Indian bank. Three limits matter for a land-based employee in Dubai. It is worded for a non-resident, so it presupposes the very status in dispute. It is worded for services on a foreign ship, so its facts are not this client's. And the word 'merely' is the operative limit - it removes the bank credit as a ground of charge and leaves residential status and where the services were rendered to be established on the facts. The separate relief that takes voyage days out of the count altogether runs only for a citizen who is a member of the crew of a ship on a qualifying international voyage, and is measured from the sign-on and sign-off entries in the discharge certificate. None of that is available here. The honest use of the circular is as departmental confirmation of the accrual reasoning, which the High Court decision states on the statute and which travels beyond seafarers; the circular itself does not.
If residence is lost on the domestic test, the remaining route is that the client was also a resident of the other State and that the treaty tie-breaker allocates residence away from India for the period. Two things in the library shape how that is run. First, the certificate: the statute makes a residence certificate from the other government a condition of claiming treaty relief, and further prescribed particulars go with it - but the Supreme Court has held that the certificate is a necessary eligibility requirement and not conclusive evidence of residence or of entitlement, and the authorities may examine substance. This client has no certificate for the year at all, which has to be fixed before anything is argued. Second, the method: the library holds a Tribunal order that a tie-breaker enquiry form is a legitimate and important aid but cannot be the exclusive basis for the conclusion, and that it must be applied to the objective facts - relocation with family for employment, a local driving licence, overseas bank accounts and a certificate carried that case. The other tie-breaker order in the library cuts the other way and is worth reading first, because it weighs the immediate family more heavily than the extended family and treats active economic engagement as real connection while passive holdings show only where money is placed. On these facts the family did not follow until January, which is the fact the officer will use.
If the order stands, the additional tax on Rs 65 lakh comes with interest for failure to pay advance tax on it, and no credit for foreign tax is available because no foreign tax was paid - the credit provisions give relief for tax actually suffered abroad, not for the absence of it. Two further consequences follow from the status rather than from the addition, and they are usually missed. The foreign-asset schedule and the reporting obligations that go with it attach to a resident other than a not-ordinarily-resident, so a finding that this client was resident and ordinarily resident for FY 2023-24 makes his undisclosed UAE bank account a reporting default for the same year, with a flat penalty for each year of default under the separate foreign-assets legislation - an exposure that is not in the assessment order and will not appear until later. And the finding will be applied to FY 2024-25 unless the day count for that year is put beyond argument now.
Most of these are decided by the arithmetic and the arithmetic usually favours the department, because a person who leaves in October has already spent more than 182 days in India before he goes unless he was out of the country for a substantial part of the summer. Where the recount on the arrival-day convention brings the figure to 182 or above, the appeal is lost on residence and the argument narrows to interest and to the years that follow. Where it brings the figure below 182, the employment carve-out disposes of the second limb and the whole Dubai salary falls out, and the officer is left with nothing. This file sits between the two, on a departure-day convention the library cannot support, which means it should be run as a first appeal on the count with the treaty argument prepared but not led, and the client should be told that the realistic outcome depends on a point no court in this library has decided.