Commissioner of Income Tax - TDS vs ICL Shipping Ltd.

F.M. Ibrahim Kalifulla, J.—The revenue has come forward with this appeal challenging the order of the Income Tax Appellate Tribunal,

Chennai in ITA No. 2207/Mds/06, dated 15.12.2008.

The question of law posed for consideration is as to whether the conclusion of the Tribunal in holding that the Indian shipping company need not

deduct tax at source with respect to its crew for the days on which the ship was outside the territorial waters of India and the number of such days

exceeds 182 in any particular year.

We heard Mrs. Pushya Sitaraman, learned standing Counsel appearing for the appellant and perused the relevant provisions viz., Sections

2(30), 2(42) and 6 of the Income Tax Act, 1961 as well as taken note of the indisputable fact that the crews were on duty outside the territorial

waters of India in the ship of a company of Indian origin for more than 182 days.

On a reading of Sections 2(30), 2(42) and 6 together, for a person to claim the status of a ''non-resident'' has only to satisfy that though such

person as a crew works for an Indian shipping company rendered such service for the said company in the ship outside the territorial waters of

India for a period exceeding 182 days. For that purpose it would be relevant to extract Sections 2(30), 2(42) and Explanation to Section 6, which

reads as under:

Section 2(30): ""non-resident"" means a person who is not a ""resident"" and for the purposes of Sections 92, 93 and 168, includes a person who is

not ordinarily resident within the meaning of Clause (6) of Section 6;

Section 2(42) ""resident"" means a person who is resident in India within the meaning of Section 6;

Section 6: For the purposes of this Act,-

(1) An individual is said to be resident in India in any previous year, if he-

(a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more; or

(b) ***

(c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty five days or

more, is in India for a period or periods amounting in all to sixty days or more in that year.

Explanation - In the case of an individual,-

(a) being a citizen of India, who leaves India in any previous year as a member of the crew of an Indian ship as defined in Clause (18) of Section 3

of the Merchant Shipping Act, 1958 (44 of 1958), or for the purposes of employment outside India, the provisions of Sub-clause (c) shall apply in

relation to that year as if for the words ""sixty days"", occurring therein, the words ""one hundred and eighty-two days"" had been substituted.

Having regard to the said specific statutory provisions providing for the benefit of grant of exemption for a non-resident, we are convinced that

in the case on hand having regard to the fact that the crews with reference to whom the exemption was availed and who offered their services

outside the territorial waters for an Indian shipping company, the period of which exceeded 182 days, there was no scope to find fault with the

action of the Indian shipping company in not having deducted any tax at source in respect of the salary paid to such crew for the relevant period.

We therefore do not find any question of law much less substantial question of law in order to entertain this appeal and the same is dismissed.