1988 (3) TMI 95

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..... The assessee's contention was that he was a non-resident and so the salary income was not taxable. The ITO however held that since the assessee was an employee of the Indian company, his income was taxable. He has noted that although the assessee had claimed that the Maritime Union had approached the Central Board of Direct Taxes, no exemption certificate was produced before him. Before the Commissioner, the assessee relied upon the interpretation of section 2(25A) which defines 'India' and does not include ship registered in India. He also contended that since the services were rendered outside India, i.e., on the ship, the salary was not earned in India and so it was not taxable. The Commissioner relied upon section 2(2) of the Citizens....

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....of this Tribunal in Fourth ITO v. Capt. B. N. Rao [1984] 7 ITD 536. Lastly, he pointed out that there was no proof that salary was paid in India. It can be seen that the crucial question is whether the assessee can be said to be a resident of India which means that we have to decide the question whether the ship which was registered in India on which the assessee was working is part of India or not. Even if the assessee is not regarded as a non-resident, the question would also arise whether it can be said that the income has accrued or arisen or is deemed to have accrued or arisen to him in India during such year under section 5(2)(b). Under section 9(1)(ii). Explanation, salary income payable for services rendered in India shall be regard....

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....a ship registered in India is part of India has not been taken into account. This is a well accepted position. The following quotation from Introduction to International Law J. G. Starke (8th edition), are in support thereof : "For the purpose of territorial jurisdiction, besides actual territory, it has been customary to assimilate the following to State territory : (a)..... (b) A ship bearing the national flag of the State wishing to exercise jurisdiction. (c)..... "Floating Island - A ship bearing the national flag of a State is for the purposes of jurisdiction treated as if it were territory of that State, on the principle that it is virtually a floating island.'" Further, if we were to accept the position that a perso....