TaxTMI 
TaxTMI 
TaxTMI 
1978 (6) TMI 39
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....to the assessee started the work in 1964, but before the same could be completed the contract was terminated in 1967. On the 7th November, 1968, a settlement was arrived at by and between the assessee and the Hindusthan Steel Ltd. whereunder the assessee received the following amounts for works done up to the date of the termination of the contract: Accounting year Amount Rs. 1964 8,66,170 1965 11,53,731 1966 33,72,950 1967 33,05,860 ------------------ 86,98,711 ------------------ The assessee was assessed to income-tax in the assessment years 1965-66 to 1968-69, the relevant accounting years being the calendar years 1964 to 1967. In course of the proceedings, it was claimed by the assessee that a part of its agreement w....
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....of plant, equipment, etc., f.o.b., at a Canadian Port and it was submitted that as the title to the plant and equipments passed to the Hindusthan Steel Ltd. at a Canadian Port under the f.o.b. contract and since the payments to the assessee in respect thereof were made outside India there was no justification for treating the profit arising out of sale of such plant and equipment as accruing or arising in India. On behalf of the revenue, it was contended that on a proper construction it would be clear that there was one single indivisible contract for the project between the assessee and the Hindusthan Steel Ltd. The terms of payment as recorded in the agreement were not to be made in one lump sum but over a period depending upon the prog....
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....ons on the question whether the contract should be considered to be one indivisible contract or a conglomeration of separate contracts. In our view, this controversy on which the matter has proceeded from the very inception is of little relevance in the instant case. A non-resident is charged to income-tax in India under s. 5, sub-s. (2), of the I.T. Act, 1961, which reads as follows: "(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which-- (a) is received or is deemed to be received in India in such year by or on behalf of such person; or (b) accrues or arises or is deemed to accrue or arise to him in India during suc....
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.... operations are not carried out in India, the income of the business deemed under this clause to accrue or arise in India shall be only such part of the income as is reasonably attributable to the operations carried out in India; (b) in the case of a non-resident, no income shall be deemed to accrue or arise in India to him through or from operations which are confined to the purchase of goods in India for the purpose of export; (ii) income which falls under the head 'Salaries', if it is earned in India; (iii) income chargeable under the head 'Salaries' payable by the Government to a citizen of India for service outside India; (iv) a dividend paid by an Indian company outside India." In spite of the clear statutory provisions note....