TaxTMI 
TaxTMI 
2001 (5) TMI 35
X X X X Extracts X X X X
X X X X Extracts X X X X
....eclaring a total income of Rs. 3,85,528. The same was worked out as fellows : "Adjustment profit: Adjusted profit Rate of profit = --------------- Total world revenue i.e., 6,495,160 = 829 Taxable Indian income $ AU 1,682,629 x 8.4 &....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rection of the Australian Minister for Civil Aviation. Neither under the Australian law of taxation nor the Indian law of taxation could such interest earnings be regarded as income flowing from any business carried on by the assessee in India. Since the income from interest was not from any transaction in India, it was not liable to tax. The Tribunal accepted the submission. On being moved, the question, as set out, has been referred for the opinion of this court. We have heard learned counsel for the parties. The stand of learned counsel for the Revenue is that the Tribunal bas wrongly applied section 9 of the Act and rule 10 of the Income-tax Rules, 1962. The Tribunal ought to have held that the interest in question was deemed income under section 9 of the Act and should have been held to have accrued or arisen in India or be reasonably attributable to the operations carried out in India. Learned counsel for the assessee, on the other band, submitted that since the interest income has not been earned from any business done in India and is not relatable to any income earned in India, the Tribunal's view is in order. In order to appreciate the rival submissions, it would be ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Rule 10 deals with the topic of determination of income in the case of non-residents. On a plain reading of sections 5(2), 9 and rule 10 the position is clear that where the total income in the case of a non-resident has to be treated as income from whatever source derived which is received or is deemed: to have been received in such a year by or on behalf of such a person, additional income that arises, or is deemed to have arisen or accrued to a person has also to be taken note of. Cumulative conditions necessary for bringing in application under the aforesaid provisions are that income which is deemed to have accrued or arisen in India, has to be income whether directly or indirectly or through any business connection in India; through or from any property in India ; through or from any asset or source of income in India ; through or from any money lent at interest and brought into India in cash or in kind ; through the transfer of a capital asset situate in India. In the case of business of which all operations are not carried out in India, only such part of the income as is reasonably attributable to the operations carried out in India can be deemed as income from business un....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; 14,241,939 Income from investments (note 14) 91,169 36,484 Other revenue (note 15) 4,550,361 3,531,731." "Insurance reserve : The reserve of $ 19.36 million at 31st March, 1971, is held to cover risks which the company may decide from time to time as a matter of policy, to self-insure. Self-insurance premiums charged against profits during 1970-71 and crested to the insurance reserve amounted to $721,254. Interest of $ 832,832 was earned from investments in Commonwealth Treasury Bonds held to protect the insurance fund. After claims $83,320 and provision for overseas taxation $12,071 the net amount of $737,441 was credited to the reserve." A reading of the note does not show that the investment in the bonds came out of any income which is even remotely linked with the operations in India. The ....