Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the concession provided under r. 3 of Part II of Schedule I to the WT Act, 1957, was not applicable to the assessee’s case ?

High Court Of Madras

M.A. Murugappan vs. Commissioner Of Wealth Tax

Sections WT RULE 3, WT SCH. I PART II

Balasubrahmanyan & Ratnam, JJ.

Tax Cases Nos. 1262 & 1263 of 1977

17th November, 1982

Counsel Appeared

N. Srinivasan, for the Assessee : J. Jayaraman & Nalini Chidambaram, for the Revenue

BALASUBRAHMANYAN, J.:

This reference from the Tribunal is under the WT Act, 1957. The question relates to the applicability to the assessee, who figures in this case, of a concessional rate of tax provided for under r. 3 of Pt. II of Sch. I to the Act. This rule provides for the cutting down of the wealth-tax rates by one-half, in a case where the assessee is an individual who is not a citizen of India and who is also not a resident of India. It is not in dispute that the assessee in this case is not a citizen of India. So far as the degree of the assessee’s residence is concerned, there again we do not have any controversy that the is a person “not ordinarily resident in India”. The question is whether r. 3, in the circumstances, would apply to the assessee’s case.

The Tribunal said that the assessee would not come within r. 3 because he does not answer the description of an individual who is not a resident in India. We agree with this view.

The WT Act is familiar with three degrees of residence as applicable to an individual. All of them are mutually exclusive. They are—(1) the status of a person who is a resident in India; (2) the status of a person who is not a resident in India; and (3) the status of a person who is not ordinarily resident in India. Since the assessee in this case belongs to the category of a “not ordinarily resident” individual, it means he cannot come under either category (1) or category (2). It follows, therefore, he cannot claim a concessional rate of taxation under r. 3, as if he is a person not resident in India.

The text of the question of law is as under:

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the concession provided under r. 3 of Part II of Schedule I to the WT Act, 1957, was not applicable to the assessee’s case ?”

For the reasons mentioned earlier, the question is answered against the assessee and in favour of the Department. The Department will have its costs. Costs one set. The counsel’s fee is fixed at Rs. 500 (rupees five hundred only).

[Citation : 142 ITR 107]

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