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TMI Blog2014 (3) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessee, an individual, is in employment of Executive Ship Management Pte. Ltd., Singapore (ESM-S, in short), and works on merchant vessels and tankers plying on international routes. In addition to this salary income, the assessee also derives income from bank interest and receives pension from Indian Army, his former employer. There is also no dispute that the assessee's stay in India, in the relevant previous year, was less than 182 days, and that the residential status of the assessee is 'non -resident'. In the income tax return filed by the assessee, the salary received by the assessee from ESM -S was not offered to tax. The income tax return filed by the assessee was selected for scrutiny assessment , and, in the course of resultant assessment proceedings, the Assessing Officer required the assessee to show cause as to why salary received by the assessee from ESM-S, for services rendered as ship crew, not be brought to tax in India. It was explained by the assessee that as assessee was a non -resident, the scope of his income liable to be taxed in India was restricted to income accruing or arising in India, income deemed to accrue or arise in India, or income received or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the CIT(A) but without any success. Learned CIT(A) upheld the stand of the Assessing Officer and observed as follows: - I have considered the rival contentions of the Ld. AR of the appellant and gone through the assessment order and the decisions in the cases relied upon by the appellant. The Assessing Officer has ma de the addition of Rs.13,34,8 84 as salary accrued and received in India. In this case, the appellant was an employee of M/s Executive Ship Management P te Limited, Singapore. The employer company had issued the appointment letter to the appellant in India. Therefore, the salary was accrued in India. The appellant has maintained his bank account with HSBC Bank in India, in which the salary was deposited by the employer. Therefore the salary was also received in India. As per section 15 of the Income Tax Act also, the salary is to be tad on accrual basis. Since, the appointment letter was issued in India and therefore the salary was accrued in India. As per provision of the section 5(2) of the Income Tax Act, 1961 the income which is accrued or received in India is taxable in India . Accordingly, I am of the considered opinion that since the salary was accrued and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pension income and interest income, or that the assessee had 'resident' status for these incomes. In view of this finding, Section 6(5) cannot have any application in the matter, though, for the reasons we will set out now, Section 6(5) is anyway a redundant legal provision which can no longer have any practical implication s. Section 6(5) provides that, " If a person is resident in India in a previous year relevant to an assessment year in respect of any source of income, he shall be deemed to be resident in India in the previous year relevant to the assessment year in respect of each of his other sources of income". This sub section is one of the few provisions which have remained intact since the Income Tax Act,1961, is enacted, but then ironically this sub section itself is redundant since long time, because effective assessment year 1989 -90, previous year, for all sources of income and for all assessee, is uniform i.e. financial year immediately preceding the assessment year. Until that time, it was possible for an assessee to have different previous years for different sources of income, e.g. calendar year for business income and financial year for income form salaries, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the income is said to have accrued to him even though it may be received later, on it's being ascertained , but this proposition will be relevant only when assessee gets a right to receive the income, and, in the present case, assessee gets his right to receive salary income when he renders the services and not when he simply receives the appointment letter. The stand of the Assessing Officer, which has been rather mechanically approved by the learned Commissioner (Appeals) as well, is devoid of legally sustainable merits. 9. The next objection of the Assessing Officer, which has met learned CIT(A)'s approval, is that the money was received in India , since, beyond any dispute or controversy, the salary cheques were credited to the assessee's account with HSBC, Mumbai. So far as this aspect of the matter is concerned, in our considered view, the law is trite that 'receipt' of income, for this purpose, refers to the first occasion when assessee gets the money in his own control - real or constructive. What is material is the receipt of income in its character as income, and not what happens subsequently once the income, in its character as such is received by the assessee or his a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but if, at each point of receipt, the income is to be taxed, it may have to be taxed on multiple occasions. In this view of the matter, in a situation in which the salary has accrued outside India, and, thereafter, by an arrangement, salary is remitted to India and made available to the employee, it will not constitute receipt of salary in India by the assessee so as to trigger taxability under section 5(2)(a) of the Act. 10. In view of the above discussions, as also bearing in mind entirety of the case, we deem it fit and proper to delete the impugned addition of Rs 13,34,884. The assessee gets the relief accordingly. 11. Ground no. 1 is thus allowed. 12. In ground no. 2, the assessee has raised the following grievance: That, on the facts and circumstances of the case and in law and in any view of the matter, the authorities below have erred in making and upholding the addition of Rs 40,589 on account of bank interest earned and credited in NRE account with HSBC Bank, Mumbai. 13. So far as this grievance of the assessee is concerned, the relevant material facts are like this. During the course of the assessment proceedings, the Assessing Officer noticed that total amount of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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