Salary received by a non-resident employee for services rendered...

Salary received by a non-resident employee for services rendered entirely outside India was held not to accrue or arise in India under s. 5(2)(b). Applying the settled principle that salary accrues at the place where services are actually rendered, the forum found no material to show that any part of the employment duties corresponding to the impugned salary were performed in India, and it was undisputed that the employee worked in the Philippines during the relevant period. The employer's Indian status and disbursement of salary from India were held insufficient to shift the situs of accrual. Consequently, the foreign assignment salary was excluded from Indian taxation and the appeal was allowed. - ITAT

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