TaxTMI 
TaxTMI 
2003 (10) TMI 40
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....the Act as it was not earned in India. It was argued that the field break which followed the on period was not a rest period. The Assessing Officer rejected this contention. The order passed by the Assessing Officer was confirmed by the Commissioner of Income-tax (Appeals). Further, the Assessing Officer held that free food and free beverages and free boarding on the rigs, constituted a perquisite under section 17(2)(iii). He added their value to the income of the assessee. The Assessing Officer also levied interest under section 234B on the assessee for short payment of advance tax. The order of the Assessing Officer on all the above points was confirmed by the Commissioner of Income-tax (Appeals). Being aggrieved, the matter was carried in appeal to the Tribunal which took the view that the field break, i.e., the off period was not a rest period. That during the break the assessee had to stand by in the U. K. and therefore the off period salary was not payable for services rendered in India and therefore off period salary was not taxable under section 9(1)(ii) of the Act, Consequently, the Tribunal deleted the levy of interest under section 234B of the Act. The Tribunal further ....
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....ot rule out section 191 of the Act which states that if the payer fails to deduct tax at source the tax shall be payable by the assessee directly. Mr. Porus Kaka, learned counsel for the assessee, on the other hand, contended that in the case of a contract for employment the right to receive accrues at the place where contract is entered. into or where the amount is payable. He argued that the place where the right to receive accrues would be the place where income becomes chargeable. That this is the position under section 5 of the Act. That however section 9 is an extension to section 5. That under section 9(1)(i) income from business connections in India was taxable. Therefore, under section 9(1)(i) only income from business operations in India, as far as non-residents are concerned, is taxable. That similarly, under section 9(1)(ii) read with the Explanation (introduced by the Finance Act of 1983, with effect from April 1, 1979), income payable for service rendered in India is regarded as "income earned in India" under section 9(1)(ii) of the Act. It was, therefore, contended that the intention of the Legislature is to tax only a specific type of income which arises from opera....
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....ion 201(1A). That where any income was liable to tax deducted at source, section 234B was not applicable. That even assuming that section 191 was applicable no interest is chargeable under section 234B on the assessee for failure on the part of his employer to deduct tax deducted at source. The first question which arises for determination is as follows: Question: Whether, the Tribunal was right in holding that off period salary was not taxable under section 9(1)(ii) read with the Explanation as it stood at the relevant time? Answer: In the facts and circumstances of this case, our answer is in the negative, i.e., in favour of the Department and against the assessee. Reasons: Section 4 of the Act is a charging section. It imposes tax on the total income of the previous year of every person. Under section 4(2), tax is deducted at source or paid in advance, where it is so deductible or payable. Section 5(2), on the other hand, restricts the scope of total income of a non-resident to the income which is received or deemed to be received in India or which accrues or which is deemed to accrue to him during such year. Section 9(1)(ii), inter alia, lays down that income which falls ....
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....on to section 9(1)(ii) introduced by the Finance Act of 1983 refers to what constitutes "income earned in India". This Explanation was introduced by the Finance Act of 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 services in India even if the contract is executed outside India or amount is payable outside India. However, from the said Explanation it is not possible to infer the corollary, viz., that in all cases where services are rendered outside India, the salary cannot be deemed to accrue in India, ipso facto. In certain cases, even if the services were rendered outside India, the income can still accrue or arise in India. It would depend on the facts of each case. In this case even assuming that there was no rest period as alleged by the assessee and that payment was for stand by we are of the view that training abroad ....