The Bangalore Tribunal has in its recent decision in the case of Binny Bansal (Binny Bansal v. DCIT [2026] 182 taxmann.com 226 (Bangalore – Trib.)) , a co-founder of Flipkart, has interpreted ‘Residential ‘status of a person in context to section 6(1)(c) of the Income tax Act,1961 (the Act) and under Tie-Breaker Test as provided under DTAA. This decision may help all the non-residents to plan their stay in India to continue their status of non-resident Indian. In this article we have discussed the case.
The assesse, Mr. Binny Bansal, an Indian citizen, who co-founded Flipkart and later migrated to Singapore for employment. He filed his return of income for the assessment year 2020-21 (F.Y. 2019-20) claiming non-resident status, on the ground that he was ‘being outside India’ as per Explanation 1(b) to section 6(1)(c).
The assessee submits that he has gone outside India for employment, he should be treated as person ‘being outside India’ and therefore the time limit of second limb of section 6(1)(c) should be considered of 182 days instead of 60 days by invoking Explanation 1(b).
The Assessing Officer (AO) treated the assessee as a resident of India under section 6(1)(c), citing his stay of 141 days in India during the F.Y. 2019-20 and over 365 days in the preceding four years. The AO denied the benefit of Explanation 1(b), holding that it applied only to non-residents, not to someone who was a resident in the immediately preceding year. Dispute Resolution Panel (DRP) also upheld the AO’s decision.
The Bangalore Tribunal has also affirmed the view of AO and decision of DRP. The Tribunal decision is as under:
1. According to provision of section 6(1)(c), an individual is resident Indian if he fulfils following two conditions which are cumulative:
(a) if he stayed within the four years preceding the financial year in India for a total period of 365 days or more; and
(b) he is in India for a period of 60 days or more in that financial year
Thus, both the cumulative conditions of stay in four preceding years and also of stay in the relevant financial year needs to be satisfied to hold the assessee as resident in India.
In this case the assessee stayed in India in preceding four years for 1,237 days which is for more than 365 days and thus the first threshold of section 6(1)(c) is met. He stayed for more than 141 days in India during the financial year and thus second threshold of stay of 60 days or more in the impugned financial year is also met and therefore has satisfied both the cumulative conditions to be treated as a Resident Indian u/s 6(1)(c) of the Act.
2. The Tribunal also rejected assesse argument that the time limit of second limb of section 6(1)(c) should be considered of 182 days instead of 60 days by invoking Explanation 1(b).
The Tribunal held that the relaxation in Explanation 1(a) applies to the previous year in which the assessee, being a citizen of India, leaves India in any previous year as a member of the crew of an Indian ship or for the purposes of employment outside India. The assesse left India in financial year 2018-19, in February 2019 for employment with 10X Pte Limited. Therefore, as the assessee has not left India in this financial year i.e. F.Y. 2019-20, this clause as such does not apply for the impugned assessment year.
3. Further, Tribunal also rejected the assessee argument that he resigned from 10X and then went to Singapore for employment with Three State Capital Advisors PTE Limited in F.Y.2019-20 and therefore, he should get the benefit of the extended periods as per clause (a) of Explanation 1. The Tribunal held that Clause (a) applies when a citizen of India leaves the country for the purposes of employment outside India. In fact, the assessee was already employed in Singapore when he visited India. He resigned from India from his employment with 10X and then once again sought an employment with Three State capital Advisory PTE Limited. Thus, when he came to India from Singapore, he was already employed by 10X PTE Limited.
Therefore, the assessee is not a person who is leaving India for employment but he is residing in Singapore, comes on brief visit to India. The Tribunal observed that If the stand of the assessee is accepted than every person who visits India will get such an extension of period every year. The provision applies only to the person who are leaving India and not visiting India. That is neither the intention nor the spirit of the provisions. Therefore, he does not qualify even for the relaxation provided under Explanation 1(a) of section 6(1)(c).
4. On the basis of the facts of the case and provisions of section 6(1)(c) of the Act, the Tribunal held that assessee was Resident Indian during A.Y. 2020-21 as he has been in India for more than 60 days and satisfied the residential test of provisions of section 6(1)(c) and is not entitled to the relaxation in the period of stay as envisaged under clause (a) or (b) to Explanation 1.Accordingly his global income is taxable in India.
5. Tie Breaker Rule,
The Assessee also argued that under Tie Breaker Rule, he was non-resident.The Tribunal considering the facts, rejected assessee’s argument that he was non-resident as provided under the Tie Breaker Test as per DTAA with Singapore.
According To the provisions of Article 4 (2) of the DTAA between India-Singapore, where the individual is a resident of both the States i.e.India and Singapore, then, his title shall be determined as follows:-
(a) he shall be deemed to be a resident of the state in which he has a permanent home available to him, if he has a permanent home available to him in both states, he shall be deemed to be a resident of the state with which his personal and economic relations are closer (centre of vital interest);
(b) if the state in which he has his centre of vital interests cannot be determined, or if he has not a permanent home available to him in either state, he shall be deemed to be a resident of the state in which he has an habitual abode;
(c) if he has an habitual abode in both states or in neither of them, he shall be deemed to be a resident of the state of which he is a national;
(d) if he is a national of both states or of neither of them, the competent authorities of the contracting State shall settle the question by mutual agreement.
The assessee has a residential apartment on rent in Singapore and has owned property in Bangalore, India at the cost of Rs 39 crores. Thus, it is apparent that assessee has permanent home available in both the states. Thus, assessee shall be deemed to be a resident of the state of India and Singapore both in view of permanent home available to him at both the places.
With Respect to the centre of vital interest, it was the submission of the assessee that his personal and economic relations are closer to Singapore than India. Assessee submits that assessee does not have any independent family members in India, assessee’s nuclear family consisting of his powers and his two children are residing in Singapore along with the assessee for the whole of the financial year 2019 – 20. It was also the claim of the assessee that access does not have any independent family members in India and the assessee’s parents are independent are residing in Punjab and used to visit them only occasionally, when he was in India. Thus the assessee’s personal relations are close to Singapore.
The assessee also argued that the economic interest should be assessed based on substantive commercial engagement rather than passive investments. Most of the assessee’s investments in India were made in prior years when he was a resident of India. Investments made in India prior to the appellant’s migration to Singapore do not have any bearing on his centre of economic interest as such. Thus the investments made in India are not by any means an indicator of the centre of economic relations since there was a regulatory restrictions on repatriation of funds outside India for the purposes of overseas investments. The assessee also submitted that majority of the investments made in India by the assessee are passive portfolio investments. The assessee submitted that total amount of investment made in India as on 31st of March 2020 is Rs.73,792 lakhs out of which Rs.60,035 lakhs was invested in earlier years while the assessee was a resident of India. With respect to the investment made in non-Indian assets, it was submitted that as on 31st of March 2020,investment made outside India is Rs.87,789 lakhs, out of which Rs.86,846 lakhs was invested post-migration to Singapore. This clearly indicates that the economic interest of the assessee shifted to Singapore during financial year 2019 – 20.
Tribunal also rejected argument on tie breaker rule for the reason that the assessee has more economic interest in India as he owns immovable properties in India of approximately Rs. 40 crores, bank account holding of Rs. 7.29 crores, shares and securities of Rs.65,967 lakhs, and the loans and advances of Rs.30crores. The total investment outside India is Rs.87,789 lakhs out of which most of the investments are made by the assessee outside India during financial year 2019 -20. The Tribunal finds that the test is to examine the residential status of the assessee for the assessment year, therefore it is material that such centre of vital interest remains throughout the assessment year and not at the end of the assessment year only. This is also for the reason that all the test envisaged under Article 4(2) refers to for the situation of the whole year. Therefore Tribunal rejected the argument of the assessee that centre of vital interest must be seen after the assessee shifted to Singapore.
Thus, If the individual has a permanent home in both the contracting States, the issue of examining his centre of vital interest arises meaning thereby that it is to be ascertained with which of the two states his personal and economic relations are closer. One must have a regard to his family and social relationships, his occupation, his political, cultural or other activities, his place of business and the place from which headministers his property. In the present circumstances, the assessee has made investment only after he has shifted to Singapore. Still his major investment, his house properties are situated in India. Assessee does not own any immovable property outside India. Therefore, looking at his major economic interest, it is apparent that it is more closer in India than Singapore or anywhere else.
Tribunal holds that according to the Tiebreaker test also the assessee is a resident of India.
This Tribunal has interpreted ‘residential status’ in context to provisions of Explanation1(b) to Sec. 6(1)(c) of the Act and also under the Tie breaker Rule provided under the DTAA. So a non-resident can take the benefit of extended days of stay of 182 days instead of 60 days, as provided in Explanation 1(b) to Sec.6(1)(c) of the Act in the year of leaving India for employment outside India. Thereafter, in subsequent years, he can not take the benefit of extended period of stay of 182 days in India.
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