Foreign employment income and declaratory immunity notification: remittance to India did not make Commonwealth Secretariat salary taxable.

Salary earned from foreign employment with the Commonwealth Secretariat was treated as outside Indian tax merely because it was remitted to an Indian bank account. The analysis also applied residence principles: as the employee was not shown to be ordinarily resident in India, foreign income could not be brought to tax on that basis. A later notification recognising immunity for Commonwealth Secretariat salaries was read as declaratory and removing doubt rather than creating a new prospective exemption, so the immunity was treated as applicable to the relevant assessment years. On that basis, the salary was not taxable in India.

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Issues: Whether salary earned abroad by an employee of the Commonwealth Secretariat and remitted to India was taxable in India, and whether the later notification granting immunity to Commonwealth Secretariat salaries applied to the assessment years in question.

Analysis: The salary arose from employment outside India, so it did not accrue in India merely because part of it was remitted to an Indian bank account. The assessee was not shown to be ordinarily resident in India, and therefore foreign income could not be included on that basis under the residence provisions. The notification treating Commonwealth Secretariat salaries as covered by the United Nations privileges framework was construed as declaratory in nature and as removing doubts rather than creating a new exemption prospectively only. On that footing, the salary was treated as immune from Indian income-tax under the governing statutory scheme.

Conclusion: The salary was not taxable in India, and the revenue's challenge failed.

Ratio Decidendi: Income from foreign employment is not taxable in India merely because it is remitted into India, and a declaratory notification conferring immunity is to be treated as stating the law from its commencement.

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