9911796707
TMI Blog1989 (12) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ng revenue ? " The facts as narrated by the Tribunal are as under: "The assessee is a shipping company, having its head office in Sweden. Part of its income is assessable in India in terms of section 44B of the Income-tax Act, 1961. In the course of assessment proceedings to surtax, a question arose as to how the capital of the company for the purposes of the Surtax Act should be computed. The company worked out the capital for purposes of the Surtax Act by taking Indian capital to world capital in the same ratio as Indian income to the world income. Profit as per world profit and loss account was worked out by the assessee at Rs. 83,37,289. Indian income as per the income-tax return was Rs. 14,06,948. Income arising outside India thus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany for various reasons as given in section 5 read with sections 6 and 10. Thus, for example, in the case of a company which is non-resident on the basis of the test laid down in section 6 of the Income-tax Act, 1961, all these incomes which are received by it outside India or which accrues or arises or are deemed to accrue or arise to him outside India are not includible in his total income in terms of sub-section (2) of section 5. Similarly, there are incomes mentioned in section 10, which, though accrue and arise to a company, are not includible in its total income. The reasons for non-inclusion may, thus, be either on account of the operation of sub-section (2) of section 5 or the operation of various subsections of section 10. For wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount equal to 10% of the capital of the company as computed in accordance with the provisions of the Second Schedule, or an amount of Rs. two hundred thousand, whichever is greater. Therefore, in order to calculate the chargeable profits of a company, it is necessary to find out the quantum of capital in accordance with the provisions of the Second Schedule. The Second Schedule lays down the rules for computing the capital of a company for the purposes of surtax. Rule lays down that the capital of a company shall be the aggregate of the amounts, as on the first day of the previous year relevant to the assessment year of its paid-up share capital, certain specified reserves and debentures. Rule 2 lays down that where a company owns any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 such year." The Explanations to the section are not necessary for the purpose of this case. Therefore, the scope of total income of a non-resident is limited to income which is received or deemed to be received in India or which accrues or arises or is deemed to accrue or arise to him in India. The income which has neither been received by a non-resident assessee in India or which has not accrued or arisen to him in India will not come within the ambit of "total income" as defined in section 5 of the Incometax Act. The questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even in a case where non-resident has received income in India, a portion of such income may not be includible in its total income by virtue of various other provisions of the Act including section 10. That, however, does not mean that whatever has not been excluded from the income of a non-resident by section 10 must be deemed to be included or includible in his total income. Moreover, an assessee has to file a return of chargeable profits under section 5(1) of the Companies (Profits) Surtax Act, 1964. The form of the return has been provided in the Appendix to the Companies (Profits) Surtax Rules, 1964. In Part 11 of Column I of the prescribed form, an assessee is required to state "the total income computed in accordance with the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (Profits) Surtax Act, 1964, provides that where a part of the income, profits and gains of company is not includible in the total income as computed under the Income-tax Act, 1961, its capital shall be the sum ascertained in accordance with rules 1, 2 and 3 diminished by an amount which bears to that sum the same proportion as the amount of the aforesaid income, profits and gains bears to the total amount of its income, profits and gains." Therefore, Notes 8 and 9 make it quite clear that the phrase "income not includible in its total income" cannot be confined to the items of income which have been specified in section 10 of the Act. In the case of non-resident company, income which has not accrued or arisen in India will come within t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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