IN RE: MUSTAQ AHMED Vs. STATE

JUDGEMENT

(1.) THE applicant is an individual who is a resident of Singapore and a non -resident in India. He is the sole proprietor of the business under the name and style of 'Mustafa Gold Mart' at Chennai engaged in the purchase, manufacture and sale of gold jewellery. The applicant is also the managing director of Mustafas Pte. Limited, having its registered office in Singapore. Apart from the business as above, the applicant is also engaged in the activity of purchasing gold jewellery in India for the purpose of export. He also purchases gold for the purpose of export of the converted gold jewellery. It is claimed that this activity is totally unrelated to the sole proprietary business in jewellery carried on by the applicant in Chennai.

(2.) THE applicant has been submitting returns of his business income derived from local sales and export sales with Addl. Director of IT (International Taxation), Chennai. The returns for the asst. yrs. 2005 -06 and 2006 -07 were filed on 30th Oct., 2005 and 31st Oct., 2006 respectively. In the returns, the income included the income derived from purchase and export of gold ornaments. However, the applicant filed revised returns for these two years on 30th March, 2007 claiming exemption of the income relating to purchase of gold ornaments for export. Under Explns. (a) and (b) to Section 9(1)(i), in the case of non -resident, no income shall be deemed to accrue or arise in India through or from operations which are confined to purchase of gold in India for the purpose of export. In view of this statutory provision, it is submitted that the income arising from the operations confined to purchase of gold ornaments and gold converted into gold ornaments for the purpose of export does not accrue or arise in India and therefore not liable to be included in his total income assessable to tax.

(3.) THE Director of IT (International Taxation), Chennai has taken the stand that application is liable to be rejected in terms of the proviso to Section 245R(2) of the IT Act. Section 245R(2) reads below: