1991 (6) TMI 32 - HC - Income Tax

High Court rules pension accrued in Malaya not taxable in India under section 5(1)(a) Income-tax Act.

Commissioner Of Income-Tax Versus AP Kalyanakrishnan

Commissioner Of Income-Tax Versus AP Kalyanakrishnan - [1992] 195 ITR 534 Issues:1. Taxability of pension received by the assessee in India.2. Interpretation of section 5(1)(a) of the Income-tax Act, 1961.3. Determining whether pension received by the assessee can be regarded as 'received in India.'Analysis:The judgment pertains to tax case references under section 256(1) of the Income-tax Act, 1961, concerning the taxability of pension received by an individual assessee who is a resident but not ordinarily resident in India. The primary issue revolves around whether the pension earned by the assessee is assessable in India and should be excluded from their total income. Initially, the assessee included the pension amount in their income tax return but later claimed it was not taxable as it was received outside India and remitted back. The Income-tax Officer taxed the pension received in India, leading to an appeal by the assessee before the Appellate Assistant Commissioner, who ruled in favor of the assessee, stating that the pension had accrued in Malaya and was not taxable in India. The Revenue further appealed to the Tribunal, arguing that the pension was assessable in India as it was first received in India through the Accountant-General, Madras. The Tribunal dismissed the appeals, resulting in the current references before the High Court.The crux of the issue lies in the interpretation of section 5(1)(a) of the Income-tax Act, which determines the taxability of income received in India. The court analyzed the facts and circumstances of the case, emphasizing that the pension had accrued to the assessee in Malaya and had already been assessed and taxed there as per the order of the Appellate Assistant Commissioner. The court highlighted a letter indicating that the payment arrangement by the Accountant-General, Madras, was solely for the remittance of the pension to the assessee in India, where he resided. It was established that the pension was received outside India and remitted to the assessee for convenience, not constituting the first receipt in India as per section 5(1)(a) of the Act.In discussing relevant case laws, the court distinguished previous judgments such as CIT v. P. V. Raghava Reddy and B. R. Sundaram v. CIT, emphasizing the specific circumstances and applicability of different sections of the Income-tax Act. The court concluded that the Tribunal's decision was correct, ruling in favor of the assessee and holding that the pension received should not be taxable in India. Therefore, the court answered the question in the affirmative, against the Revenue, and awarded costs to the assessee.