INCOME ACCRUE OR ARISE IN INDIA Flashcards
INCOME ACCRUE OR ARISE IN INDIA
The accrual of income is different and distinct from the receipt of income discussed above. Sometimes in the context of accrual or arise the word earned is used. A person may be said to have earned his income in the sense that he has contributed to the production by rendering of goods or services. But in order that the income may be said to have accrued to him, an additional element is necessary, that is, he must have created a debt in his favour. Income is said to accrue when it comes into existence for the first time or at the point of time when the
right to receive the income arises although the right may be exercised or exercisable at a future date.
Income is said to be received when it reaches the assessee. When the right to receive the income becomes vested in the assessee, it is said to accrue or arise.
Income is said to accrue only to that person who is lawfully entitled to that income. Income accrues at the place where the source of the income is situated, which may or may not be the same as the place from which the business activities are carried on. Normally, income accrues at the place where the contract yielding the income is entered into and for this purpose the contract should be taken to have been entered into at the place where the offer is accepted.
INCOME DEEMED TO ACCRUE OR ARISE IN INDIA [SECTION 9]
(1) Any income accruing or arising to an assessee in any place outside India whether directly or indirectly
(a) through or from any business connection in India,
(b) through or from any property in India,
(c) through or from any asset or source of income in India, or
(d) through the transfer of a capital asset situated in India [Section 9(1)(i)].
(2) Income, which falls under the head “Salaries”, if it is earned in India. Salary payable for service rendered in India would be treated as earned in India. Further, any income under the head “Salaries” payable for rest period or leave period which is preceded and succeeded by services rendered in India, and forms part of the service contract of employment, shall be regarded as income earned in India [Section 9(1)(ii)].
(3) Income from Salaries which is payable by the Government to a citizen of India for services rendered outside India (However, allowances and perquisites paid outside India by the Government is exempt) [Section 9(1)(iii)].
(4) Dividend paid by a Indian company outside India [Section 9(1)(iv)].
(5) Interest [Section 9(1)(v)]
(6) Royalty [Section 9(1)(vi)]
(7) Fees for technical services [Section 9(1)(vii)]
