1. This appeal by the assessee relates to the assessment year 1982-83, for which the valuation date was 31-3-1982.
2. The appeal is directed against the rejection by the WTO and the AAC of the assessee's claim for exception under Section 5(1) (xxxiii) of the Wealth-tax Act, 1957 ('the Act').
3. The assessee is a senior Central Government officer. From May 1975 to May 1981, he was on deputation abroad to the Sultanate of Oman. He returned to India in May 1981. He brought into India moneys and assets whose value as on the valuation date stood at Rs. 6,41,800. The assessee claimed exemption with regard to this amount under Section 5(1)(xxxiii). The claim was rejected by the WTO and the AAC on the ground that the assessee had not been ordinarily residing in a foreign country and that the benefit of the exemption will be available only to persons who have spent their lifetime abroad and who return to India for settling down permanently.
4. The only ground taken in the appeal is that the AAC erred in denying the exemption to the assessee.
5. It was contended by the learned representative for the assessee that the assessee was a non-resident from May 1975 to May 1981, that the exemption was intended to encourage the persons working abroad to bring their savings into India and that the assessee satisfies the conditions required for granting the exemption.
6. On the other hand, it was contended by the learned departmental representative that the exemption was not intended to cover persons who had gone abroad on deputation and that it applies only to persons who had been generally residing outside India and who had returned to India for the purpose of permanently settling down in India.
(7) Subject to the provisions of Sub-section (1A), wealth-tax shall not be payable by an assessee in respect of the following assets, and such assets shall not be included in the net wealth of the assessee- (xxxiii) in the case of an assessee, being a person of Indian origin who was ordinarily residing in a foreign country and who, on leaving such country, has returned to India with the intention of permanently residing therein, moneys and the value of assets brought by him into India and the value of the assets acquired by him out of such moneys : Provided that this exemption shall apply only for a period of seven successive assessment years commencing with the assessment year next following the date on which such person returned to India.
Explanation : A person shall be deemed to be of Indian origin, if he, or either of his parents or any of his grand-parents, was born in undivided India On a reading of the section, it will be found that for claiming the exemption under Clause (xxxiii), the following requirements should be satisfied : 3. On leaving the foreign country, he should have returned to India ; and 4. The returning to India must have been with the intention of permanently residing in India.
8. The revenue does not dispute the fact that the assessee was of Indian origin. It was, however, stated that the exemption was intended for persons who had settled down in foreign countries and who were compelled to leave the foreign countries. In this connection, reference was also made to Circular No. 202, dated 5-7-1976 issued by the CBDT (see Taxmanri's Direct Taxes Circulars, Vol. 2, 1985 edn., p. 686) explaining the provisions of the Finance Act, 1976, which introduced Clause (xxxiii) in Section 5(1) [105 ITR (St.) 17]. Paragraph No. 49(1) of the circular deals with the purpose of the exemption under Clause (xxxiii) of Section 5. It does not indicate that it was intended only for the benefit of persons who had settled down in foreign countries and who were compelled to leave the foreign countries. Under the Explanation to the clause, a person will be deemed to be of Indian origin if he is born in India. The assessee, therefore, satisfies condition No. 1.
9. The next condition is that the assessee should have been ordinarily residing in a foreign country. The contention of the revenue is that a Government servant, who had gone on deputation to a foreign country and who had served there for a period of six years, as in the present case, cannot be said to have been ordinarily residing in a foreign country.
In this connection, it was contended by the departmental representative that the expression 'ordinarily residing' occurring in the clause should not be given the same meaning as in the Income-tax Act, 1961 ('the 1961 Act'). It was pointed out that the definition of the terms 'resident', 'non-resident' and 'not ordinarily resident' occurring in the 1961 Act is not attracted to the 1957 Act. In support of this argument, it was pointed out that where any expression in the 1957 Act is intended to carry the same meaning as in the 1961 Act, specific provision has been made for the same in the 1957 Act as in Explanation 1 to Section 6 of the Act. But the Explanation I to Section 6 is not confined to Section 6. A reading of the section would indicate that the meaning given to the term in the 1961 Act will generally apply to the present controversy because Explanation I occurs in Section 6 which relates to the exclusion of assets and debts outside India. For the purpose of income-tax assessment, the assessee was a non-resident prior to his return to India. During that period, he was residing in a foreign country and there is no justification for not treating him as a person who was ordinarily residing in a foreign country. The assessee, therefore, satisfies condition No. 2.
10. Condition No. 3 is clearly satisfied in the case of the assessee as he had left the foreign country and had returned to India.
11. Condition No. 4 requires that the assessee should have returned to India with the intention of permanently residing in India. It: was contended by the revenue that this condition will indicate that prior to the return, the assessee should have no intention of permanently residing in India and that this condition cannot apply in the case of a Central Government employee, who had gone on deputation to a foreign country because in such case, there could not have been any intention of permanently residing in a foreign country. It was, therefore, claimed by the revenue that this condition will require that the assessee must have returned to India for permanently settling down in India and that this will not be applicable to the case of the assessee who had only gone on deputation to the foreign country. In this context, the assessee relied upon a letter received from the Canara Bank enclosing a copy of the letter dated 14-1-1983 received from the Public Relations Officer (PRO), Income-tax Department, Bombay. In that letter, the PRO had stated that the balance outstanding to the credit of Nonresident (External) Savings Bank F.D. and Foreign currency nonresident deposits account standing in the name of the non-resident at the time of returning to India is exempt from wealth-tax for the seven successive assessment years. The letter is in general terms mentioning about the returning to India. Further, the question has to be decided on an interpretation of Clause (xxxiii) of Section 5 and the matter cannot be decided on the basis of a letter written by the PRO.Reliance was also placed by the assessee on the Reserve Bank of India Manual relating to 'Exchange Control : Non-resident Indians'. It is stated that the Government servants deputed abroad on assignment with foreign Governments or regional/international agencies, like the World Bank, International Monetary Fund (IMF), World Health Organisation (WHO), Economic and Social Commission for Asia and the Pacific (ESCAP) are non-residents. It is further stated in the note that such non-resident Indians become residents in India only when they come back to the country for employment or for carrying on in India any business or vocation or for any other purpose indicating an intention for indefinite duration of stay in India. It is also stated that they cannot be regarded as persons resident in India when they come on a visit to India for a short period. This is in line with the provisions of the 1961 Act by which a person visiting India for a short period during the period of employment outside India will not become a resident.
12. In this context, it was pointed out by the assessee that merely because the assessee may retain a lien in the Government service in India during the period of his deputation abroad, it does not follow that when the assessee returns to India after the expiry of the period of deputation, he is not returning with the intention of permanently residing in India. It is pointed out that it would be open to the assessee to resign the Government job and to continue to reside abroad.
Similarly, it was open to the assessee to repatriate or not to repatriate what he had earned in the foreign country. It was, therefore, claimed that when after the period of deputation, the assessee returns to India and brings with him the wealth earned by him in the foreign country, it can be a case of the assessee returning to India with the intention of permanently residing therein. There is substance in the contention. The expression 'with the intention of permanently residing therein' might have been introduced to distinguish the return to India on a temporary visit to India. The assets brought to India during a temporary visit will not qualify for exemption. It will not, therefore, be correct to presume that the expression 'with the intention of permanently residing therein' will indicate that the exemption will be available only to those, who had permanently settled down in a foreign country. The Legislature in enacting the exemption, has not stated that the assessee should have settled down in a foreign country before his return to India. Similarly, no period of residence abroad has been specified for qualifying a person for the exemption.
The present assessee happens to be a Government servant and the fact that he was on deputation is now urged as a circumstance disentitling him for exemption. But, as pointed out by the assessee, the assessee could have resigned from the Government service and could have continued to reside in the foreign country. There are numerous persons who are now working in foreign countries on private employment. It is possible that they may work in a foreign country even without visiting India for a period of six years and then decide to return to India. Can it be said that in their case there was no return to India with the intention of permanently residing therein The residence of such persons in foreign countries on private employment may be for a short period or it may run into a long period like 25 years or 30 years. Can the exemption be denied to them merely on the ground that they had not disclosed any intention to settle down permanently in the foreign country It appears to us that the exemption cannot be refused to such persons. The Legislature has not chosen to confine the exemption to persons who had settled down in foreign countries. No indication is also available in the section as to how many years residence abroad will qualify a person to claim that he was ordinarily residing abroad.
The assessee's claim for exemption can be denied only if we hold that the expression 'who was ordinarily residing in a foreign country' relates to a person who had settled down in a foreign country. But to do so, in our opinion, would amount to adding words to the clause.
Under the circumstances, we feel that there is no justification to deny the claim of the assessee for the benefit of the exemption. We, therefore, hold that the assessee is entitled to the exemption under Section 5(1)(xxxiii).