1983 (4) TMI 104

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....te purposes in his total income computed under the Income-tax Act, 1961 ('the Act'). 3. There is an agreement dated 26-3-1969 [See Taxmann's Direct Taxes Circulars, Vol. 1, pp. 460-711 between India and France for the Avoidance of Double Taxation within the meaning of section 90(b) of the Act. In accordance with article XIV thereof, the salary earned by the assessee in France cannot be taxed in India because he did not render the services in India. The question was as to whether his salary income earned in France could be included in his total income for rate purposes while making his assessment under the Act in India. The case of the assessee was that the income earned in France is not only exempt from tax but also could not be included....

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....t, and not with an Agreement for Avoidance of Double Taxation. He referred to section 5 of the Act, which states that in the case of a resident, income earned even outside India shall be included in the total income. Then, he referred to the agreement dated 26-3-1969, and pointed out that the said agreement only states that under certain circumstances, certain items of income will not be subjected to tax, by one of the contracting parties. He pointed out that the said agreement does not refer to the total exclusion of any item from the total income. On the contrary, article XIX of the agreement states that the laws in force in either of the Contracting States will continue to govern the taxation of income. Again, article XIX(4) states : "In....

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....ons of both the parties as well as the facts on record. We find force in the contentions raised for the revenue. Section 5 clearly states that in case of a resident, like the assessee, income arising even outside India has to be included in his total income. There are certain items which may be included in total income, but yet be not subjected to tax like those enumerated in Chapter VI[I] of the Act. Section 110 of the Act states that where any item is included in the total income on which no tax is payable, then the tax will be charged on the remaining income at the rate applicable to that income, which is arrived at after including the exempted income in the total income. In other words, unless an income cannot be included in the total i....