1990 (9) TMI 114 - AT - Income Tax

Summary

Issues:
1. Taxability of income earned outside India by an Indian citizen.

Analysis:
The appeal involved a dispute regarding the taxability of income amounting to Rs. 14,860 earned by the assessee outside India during the relevant assessment year. The assessee, an Indian citizen working as a Professor at an institute in India, participated in a program in Malaysia and earned the income in question. The assessee claimed non-taxability based on being a "Not Ordinarily Resident" (NOR) in India. However, tax authorities contended that the assessee was a resident in India during the relevant year, making the income taxable under section 5(1)(c) of the Income-tax Act, 1961.

The proviso to section 5(1)(c) exempts income derived from sources outside India for a person not ordinarily resident in India, provided it is not derived from a business controlled in or a profession set up in India. The essential requirements for the proviso's applicability include the person being an NOR in India, the income accruing or arising outside India, and not being derived from a business controlled in or a profession set up in India. In this case, the assessee failed to fulfill the condition of being an NOR, as evidenced by the number of days spent in India during the preceding years, thereby making the income taxable under section 5(1)(c).

The Tribunal rejected the argument that the income, paid in Malaysia in Malaysian Dollars, should be exempt from tax upon receipt in India. The status of the assessee as a 'Resident' in India during the relevant year made the income includible in the total income and taxable on an accrual basis. A comparison was drawn with a previous case involving a pensioner, highlighting the distinction in residential status and the taxability of income earned outside India.

Additionally, the assessee's claim for the benefit of section 80R was deemed untenable as the Staff Training Centre in Malaysia where the income was earned did not fall within the categories specified for exemption under section 80R. The bodies notified by the Central Government for section 80R benefits did not include the said Staff Training Centre, leading to the rejection of the assessee's claim for the benefit.

Overall, the Tribunal upheld the taxability of the income earned outside India by the assessee, considering the residential status and provisions of the Income-tax Act, 1961.