Office-linked allowance can be salary and accrue in India when payment depends on continued holding of the post.
A receipt payable only by reason of an office held in India was treated as income because the assessee accepted that the amount fell within the charging provision. The income was held to accrue or arise in British India since the right to receive it depended on continued holding of the office of Lord Bishop of Lucknow, and payment would cease if that appointment ended. The allowance was also treated as salary, because it was received on account of the office and qualified as a perquisite attached to the post rather than a personal receipt. On that basis, the amount was chargeable under the head "salaries".
Issues: (i) Whether the sum received from the Colonial Bishopric Fund constituted income of the assessee. (ii) Whether the income accrued or arose in British India. (iii) Whether the allowance was taxable as salary under the head "salaries" or as income from other sources.
Issue (i): Whether the sum received from the Colonial Bishopric Fund constituted income of the assessee.
Analysis: The character of the receipt was treated as an allowance, and it was accepted on behalf of the assessee that the amount constituted income within the charging provision.
Conclusion: The sum was income of the assessee.
Issue (ii): Whether the income accrued or arose in British India.
Analysis: The receipt was not received in British India, but it became payable only because the assessee held the office of Lord Bishop of Lucknow in India. The right to receive the amount was dependent on continued holding of that position in India, and the payment would cease if he abandoned the appointment and returned to England. On that footing, the income sprang into existence and became payable in British India.
Conclusion: The income accrued or arose in British India.
Issue (iii): Whether the allowance was taxable as salary under the head "salaries" or as income from other sources.
Analysis: The allowance was received by reason of the assessee's office and not in a personal capacity. The definition of salary included fees and perquisites received in addition to salary or on account of the office held, and the allowance was treated as a perquisite attached to the position.
Conclusion: The amount was taxable as salary under the head "salaries".
Final Conclusion: The reference was answered against the assessee on the material questions, and the receipt was held taxable as income arising in British India and chargeable under the head "salaries".
Ratio Decidendi: A receipt payable only by reason of an office held in India accrues or arises in India where the right to receive it depends on continued holding of that office, and such a payment may constitute salary when it is a perquisite attached to the office.
TaxTMI 
AI Drafter ✕
TaxTMI 
