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Report No. 12

Notes to clause 7

According to section 4(1) the chargeable income of every person whether resident or non-resident includes income "which is deemed to be received" in India in the previous year. There is, however, no enumeration at any one place of these receipts which are deemed to be received in India in the previous year. This clause merely collects together the relevant provisions, without effecting any substantial change in language1.

1. See also notes to draft clause 8.

[The deemed income referred to in section 18(4) (tax deducted at source) with be dealt within the cause corresponding to that section, as it merits special treatment.]

Notes to clause 8

It seems desirable that a provisions relating to income "deemed" to be of a particular year, or deemed to be received in a particular year should appear in proximity to each other. Hence a part of section 16(2) has been embodied in this cause. No change of substance has been made.

Notes to clause 9

According to section 4(1) the changeable income of a person whether resident or nonĀ­resident includes income, profits and gains which "are deemed to accrue or arise to him in the taxable territories" in the previous year. Income is deemed to accrue or arise under various provisions scattered all over the Act. All these provisions which deal with income which is deemed to accrue or arise in India have now been grouped together.

The changes made are all of a drafting nature, and are intended to remove ambiguity and simplify the expression,

Sub-clause (i).-The words "sale of a capital asset in the taxable territories" in the existing section 42(1) are slightly ambiguous, since "in taxable territories" can be read either with "sale" or with "capital asset". To remove this ambiguity, the word "situate" has been added after "capital asset". (It is not necessary to make any such addition in the earlier phrases referring to business connection etc., since the language there does not end itself to any ambiguity.)

The words "that part of the operations", in the existing section 42(3) have been replaced by "the operations", for two reasons; first, the word "that" in the existing section is not happy, since it is not "followed, by any pronoun, and secondly, the existing words are not in symmetry with the opening words "in the case of all the operations".

As to the meaning of the word "operation", see the decision of the Supreme Court, in the Anglo French Textile Co. v. C.I.T., (1953) 23 ITR.

Sub-Clause (ii).-An attempt has been made to simplify the language, by omitting unnecessary words such as "if payable in the taxable territories wherever paid". The substance is not affected by the deletion of these words, since the proposition sought to be enacted is only this, that salary earned in India is deemed to accrue or arise in India.

Notes to clause 10

This embodies section 4(2). The section is based on a double fiction. While the income of the non-resident husband and is treated as the income of the resident wife, it is also treated as income which is deemed to accrue to her in India.

The provision has been embodied in the draft, with a slight verbal change (see the words "or on her behalf, which, have been added to make it comprehensive).

Income-Tax Act, 1922 Back

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