Sen, Chairman - An application has been filed by Mr. Cyril Eugene Pereira on 23-10-1997 seeking advance ruling on the following questions :

Q.1.On the facts and in the circumstances of the case, and having regard to the fact that :—

(a)the applicant’s stay in India in a year is less than 182 days, and the stay in four preceding years in less than 365 days, hence, he is non-resident in India under section 6 of the Indian Income-tax Act, 1961, and

(b)he has a permanent home available to him in UAE as well as in India,

(c)having regard to the fact that his ‘Centre of Vital Interest’ cannot be determined, but

(d)having regard to the fact that he has (due to his employment) his habitual abode in UAE

whether, the applicant would be regarded as a resident of UAE in terms of article 4 of the Double Taxation Avoidance Treaty entered by India with United Arab Emirates ?

Q.2.On the facts and in the circumstances of the case, whether the applicant would be entitled to be taxed at the lower rate of tax as per article 10 - Para 2(b) and article 11 - Para 2(b) of the said DTA Treaty—

(a)at the rate of 15 per cent on gross dividend income, arising in India (for dividend income prior to 1-7-1997), and

(b)at the rate of 12.5 per cent on gross interest income on investment accruing and arising in India to the applicant from the investments made in Debentures and Bonds of Indian companies or any other interest income on loans/advances made out of his moneys from his Non-Resident External Account ?

Q.3.Whether, on the facts and in the circumstances of the case and having regard to the fact that the applicant is resident of UAE in terms of article 4 of the said DTA Treaty, gains arising on sale/transfer of his movable properties would be taxable only in UAE and not in India as per article 13 - Para 3 of the said DTA ?

2. The applicant claims to be an individual who is not a resident of India and is permanently residing in Abu Dhabi, UAE, since 1977. The applicant has annexed a copy of Employment Agreement dated 5-2-1980 from which it appears that Abu Dhabi Gas Industries Ltd. has appointed the applicant originally for a period of two years. One of the terms of the agreement was that "The company shall provide free furnished accom-modation in accordance with company approved policy". The case of the applicant is that this agreement has been extended from time to time. During the previous year, i.e., 1997-98, the applicant’s stay in India was for 112 days only. During the four preceding financial years, the total stay of the applicant in India was 175 days. Hence, he is not a resident under section 6(1)(a) or 6(1)(c) of the Income-tax Act, 1961 (‘the Act’).

3. The applicant’s family consists of his wife and 3 children. They used to stay with the applicant in UAE from 1988 to 1994. The wife and the children, however, returned to India for better education of the children. The family members now reside in India and go for a vacation to Abu Dhabi every year for an approximate period of two months a year.

4. The applicant owns two flats in Mumbai. The cost of these flats is stated to be Rs. 1,62,500 and Rs. 8,25,000, respectively. The year of purchase or the present market value of the flats has not been disclosed. In addition to the above, the applicant is stated to have purchased certain shares and debentures in various Indian companies and units of mutual funds with the permission of the RBI. The cost of these shares and debentures, etc., is stated to be Rs. 10,23,000. Here again, the market value of the shares and the debentures has not been stated. Deposits in FCNR and NRNR accounts in the Indian banks are stated to be Rs. 4.05 lakhs and Rs. 7.54 lakhs, respectively. As against this, the balance in Abu Dhabi Bank is approximately Rs. 15 lakhs. He also owns a motor car which is worth about Rs. 3 lakhs.

5. It has further been stated by the applicant that his Indian investments have been made out of his NRI accounts and that tax @ 20 per cent has been deducted