JUDGMENT

S.C. Dharmadhikari, J. - We have heard Mr. Pinto at some length.

2. He would submit that the questions proposed by the Revenue are indeed substantial questions of law.

3. The Tribunal was in error in reversing an order passed by the Commissioner under Section 263 of the Income Tax Act, 1961. That is done on misreading of the legal provisions and particularly the status of the respondent/assessee.

4. Having perused the order under Appeal, we are unable to agree with Mr. Pinto. The Tribunal had before it the entire factual conspectus. The respondent/gentleman before the Tribunal and before us has been serving in ''M/S Morgan Stanley International (Inc)'' of the USA. He was on deputation to India. He filed return of income for Assessment Year 2003- 2004 on 19th October 2004, claiming the status of a ''Resident'', but ''not ordinarily resident'' within the meaning of Section 6 sub-section 6 clause (a) of the Income Tax Act, 1961. He offered the salary earned in India to the extent of Rs. 3,23,23,506/- to tax. He offered further income under the head ''Short Term Capital Gain'' and ''Bank Interest'' on his own, which the Assessing Officer brought to tax by his Assessment Order of 24th January 2006.

5. The said proceedings resulted from the refund sought by this assessee and the Assessing Officer modified his order by invoking Section 154 of the Income Tax Act, 1961. Admittedly the Assessing Officer was possessed of this power and he modified or corrected his order to the extent of the amount of income which could be brought to tax.

6. The Commissioner was of the view that the Assessing Officer did not examine the legal status of the assessee in the course of the assessment proceedings and, hence, initiated action under Section 263 of the Income Tax Act. That is on the footing, namely, the unamended Section 6 sub-section 6 clause (a) of the Income Tax Act, 1961.

7. At the relevant time, this Section read as under :-

"S.6 Residence in India

(6) A person is said to be "not ordinarily resident" in India in any previous year if such person is-

(a) an individual who has not been resident in India in nine out of the ten previous years preceding that year, or has not during the seven previous years preceding that year been in India for a period of, or periods amounting in all to, seven hundred and thirty days or more; or

(b) -----"

It is in these circumstances, the Commissioner directed that the income to be brought to tax should be corrected.

8. It is said that the Assessing Officer gave effect to the order of the Commissioner, but when the assessee asked for rectification of that order to exclude double addition, the Assessing Officer surprisingly passed another order dated 24th February 2009 deleting the entire amount.

9. It is in these circumstances that the records were again summoned by the Commissioner of Income Tax and he returned the finding that the order of the Assessing Officer is erroneous in so far as it is prejudicial to the interest of Revenue. Not only the salary, but his perquisites also should be brought to tax was the view of the Commissioner.

10. The aggrieved assessee approached the Tribunal and the Tribunal considered both issues in the backdrop of the peculiar facts and in para 9 came to the conclusion that there could not be prejudice caused to the Revenue as the Assessing Officer not only brought to tax the Indian component, but the global component of the salary. That was a mistake and he, therefore, made this correction so as to pass an Assessment Order in tune with the law. It does not mean that the Commissioner was authorised by the same legal provision, namely, Section 263 of the Income Tax Act to raise the issue of tax ability. Firstly, all proceeds of the entire tax deducted at source and secondly, that part of the refund which was granted to the assessee on the basis that the sum refunded, does not belong to the assessee, but to his employer.

11. The main issue was whether there was indeed any mist