2004 (7) TMI 74

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.... India. During the year under consideration, the respondent was in employment of this company and thus derived income from "salaries" from it. The questions raised before us are as follows: Questions: "1. Whether, on the facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally justified in holding that the salary paid to the assessee for the off period outside India was not chargeable to Indian Income-tax Act in terms of section 9(1)(ii) of the Income-tax Act, 1961, whereas the learned Income-tax Appellate Tribunal has itself held, vide order dated March 25,1992, in I.T.A. No. 5649/D/92, dated July 28, 1999, in I.T.A. No. 1079/D/91, dated January 24, 2000, in I.T.A. No. 411/D/93 and dated May 15,2....

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....e which falls under the head "Salaries", if it is earned in India, shall be deemed to have accrued to the nonresident during such year. Therefore, section 9 is a deeming section. It brings in certain types of incomes, which may not come under section 5, into the definition of "total income" under section 2(45). Section 9(1)(ii) read with the Explanation provides for an artificial place of accrual for income taxable under the head "Salaries". It enacts that income chargeable under the head "Salaries" is deemed to accrue in India if it is earned in India, i.e., if the services under the contract for employment are rendered in India. In such a case, the place of receipt or actual accrual of salary is immaterial. In this case we are concerned w....

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....ith the services which he had to render in India. Hence, the payment which he received was for his H services in India. In this connection it may be noted that the Explanation to section 9(1)(ii) introduced by the Finance Act, 1983, refers to what constitutes "income earned in India". This Explanation was introduced by the Finance Act, 1983, with effect from April 1, 1979, to get over the judgment of the Gujarat High Court in CIT v. S.G. Pgnatale [1980] 124 ITR 391, in which it was held that in order to attract section 9(1)(ii) of the Act, liability to pay must arise in India. By the said Explanation, the original intention under section 9(1)(ii) has been revived. It explains the expression "income earned in India" to mean payment for the s....

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....It is not a perquisite. Its value cannot be added to the income of the assessee. The reasoning regarding question No. 3 is as under: It is important to note that section 234B imposes interest, which is compensatory in nature and not as a penalty. Secondly, although section 191 of the Act is not overridden by sections 192, 208 and 209(1)(a)(d) of the Act, the scheme of sections 208 and 209 of the Act indicates that in order to compute advance tax the assessee has to, inter alia, estimate his current income and calculate the tax on such income by applying the rates in force. That under section 209(1)(d), the income-tax calculated is to be reduced by the amount of tax which would be deductible at source or collectible at source, which in thi....