TaxTMI 
TaxTMI 
2000 (11) TMI 116
X X X X Extracts X X X X
X X X X Extracts X X X X
....r during the period of account relevant to the assessment year 1974-75 was not taxable in India ?" The assessment for 1974-75 was completed on August 28, 1975, by the Assessing Officer. Subsequently, at the instance of the assessee-employee, the Commissioner of Income-tax, Bombay, set aside the assessment order holding that the assessee was a non-resident. The Commissioner of Income-tax, Bombay, however, remanded the matter back to the Assessing Officer to decide the tax liability in the light of the contract of employment as per section 5(2)(b) and section 9(1)(ii) of the Income-tax Act. After the remand, the Assessing Officer by his order dated March 16, 1981, came to the conclusion that the assessee was a marine engineer on board the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l appearing on behalf of the Department, contended that the assessee was a marine engineer on an Indian ship. He contended that the ship constituted territory of India even when it operated outside India. He relied upon the definition of the term "India" in section 2(25A). He relied upon the provisions of the Merchant Shipping Act in support of his contentions. He contended that, in the present matter, the assessee cannot be treated as a non-resident as he was employed on an Indian ship which continued to be the territory of India even when it operated outside territorial waters. He further contended, that the Shipping Corporation of India had its office in India. That, the contract was executed in India. That, the funds of the Shipping Cor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....which the Assessing Officer was required to decide, on remand, was whether the income by way of salary accrued to the assessee in India. He contended that once the Commissioner of Income-tax came to the conclusion on status that the assessee was an NRI, it was not open to the Assessing Officer to re-examine that question. He contended that section 5(1) of the Act refers to the range of total income of a resident whereas section 5(2) shows accrual of income. He points out that this distinction is very important. He contended that, in the present matter, the Department has never argued the point which is now canvassed, viz., that because the services were rendered on an Indian ship, the income accrued to the assessee in India. He contended th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rson who is a resident includes all income from whatever source derived which is received or is deemed to be received in India or which accrues to him in India or which accrues to him outside India during such year. In other words, the total income of a resident Indian shall, inter alia, include even income which accrues to him outside India. On the other hand, section 5(2) indicates the meaning of accrual of income. It states, inter alia, that the total income of any previous year of a non-resident shall include all income from whatever source derived which is received by him in India or which accrues to him in India. In other words, broadly, in the case of a resident Indian all income which accrue to him whether in or outside India is tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Merchant Shipping Act and, therefore, the services rendered by the marine engineer on an Indian ship, outside India, would amount to services being rendered in India. As regards the foreign-going Indian ship contention advanced, we may state at the outset that in the case of CIT v. Indo Oceanic Shipping Co. Ltd. [2001] 247 ITR 247 (Bom) decided vide Income-tax Reference No. 444 of 1995, we have come to the conclusion that section 2(25A) which defines the term "India" does not cover foreign-going Indian ships for the purposes of deduction in the hands of the employer. We have also held in the said judgment that the provisions of the Merchant Shipping Act cannot be read into the provisions of the Income-tax Act. In that connection, we have....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eference No. 444 of 1995---CIT v. Indo Oceanic Shipping Co. Ltd. [2001] 247 ITR 247 (Bom), we hold that the income accrued to the non-resident assessee outside India during the relevant period. Before concluding this judgment, we may point out that in this case we are concerned with the assessment year 1974-75. The matter was remanded back by the Commissioner of Income-tax, Bombay, to the Assessing Officer as the contract was not placed before the Assessing Officer. While remanding the matter, the Commissioner of Income-tax directed the Income-tax Officer to proceed on the footing that the assessee was a non-resident. It was contended on behalf of the Department before us that the order of the Commissioner of Income-tax, Bombay, holding ....