MR. MUSTAQ AHMED Vs. DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION)

JUDGEMENT

(1.) THE applicant is a non -resident in India and is a resident of Singapore. He carries on business in the manufacture and sale of gold jewellery in Chennai under the name and style of 'Mustafa Gold Mart'. The applicant is the sole proprietor of that business. Through that business concern, the applicant sells jewellery in local market as well as by export, mostly to Singapore. The applicant has established a Company in Singapore under the name of Mustafa Pte. Ltd. and he holds bulk of shares therein. He is also Managing Director of another Company by name Md. Mustafa and Samsuddin Company Pte. Ltd., Singapore. Apart from the proprietory business of dealing in gold jewellery, the applicant is engaged in the activity of purchasing gold ornaments and exporting the same. Moreover, the applicant purchases gold for the purpose of conversion into jewellery and exports the said jewellery. The applicant submits that the activities of purchase of gold/gold ornaments for export are unrelated to the sole proprietory business carried on by him at Chennai. He states that he maintains separate accounts for his proprietory business and in regard to the purchases meant for export. The applicant submits that in terms of Clause (b) of Explanation (1) to Section 9(1) of the Income Tax Act, 1961, no income shall be deemed to accrue or arise in India from his operations confined to the purchase of gold/gold ornaments in India for the purpose of export. It is not in dispute that in relation to purchase and export activities, the applicant utilises the services of the Manager and some of the employees of Mustafa Gold Mart. The applicant who initially returned the income from export sales, filed revised returns for the years 2005 -06 and 2006 -07 claiming the benefit of Explanation to Section 9(1).

(2.) THE maintainability of the application was contested by the Revenue on the ground that the questions raised in the application were already pending for adjudication before the assessing authority. The contention of the Revenue was rejected and the application was allowed under Section 245R(2) of the I.T. Act and thereafter taken up for hearing on merits.

(3.) THE contentions of the applicant are summarized below: