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2022 (12) TMI 738 - AT - Income TaxIncome deemed to accrue or arise in India - interest income assessed in the hands of these assessees, being non residents, in all the three years cannot be brought to tax in India - HELD THAT:- Case of the assessing officer is that the interest income is “deemed to accrue or arise in India”. If any income is deemed to accrue or arise in India, then the same could be taxed in the hands of non residents also. There is no dispute on this proposition. However, the expression “deemed to accrue or arise in India” has been explained in Section 9 of the Act, which lists out the income, which are “deemed to accrue or arise in India”. It is a settled proposition of law that the deeming provisions are legal fiction created by the statute and hence they have to be construed strictly. There should not be any dispute that the issue in dispute in the hands of both these assessees has to be tested in terms of sec. 5(2) and sec. 9(1)(v) - No doubt that the income deemed to accrue or arise to a non resident in India is liable to be taxed in India. The question is whether the interest income accrued on a deposit kept in a foreign bank account can be considered as “deemed to accrue or arise in India”. Sec. 9(1)(v) of the Act lists out three situations in which an interest income could be “deemed to accrue or arise in India”. In these years, the interest income has accrued on the deposits kept by the assessees in HSBC bank, Geneva and hence the said interest income cannot be said to fall under the definition of “deemed to accrue or arise in India” as given in sec. 9(1)(v) i.e., the interest income has actually accrued outside India. Hence the said interest income cannot be assessed in the hands of the assessees, since they are non-residents. Accordingly, we do not find any infirmity in the decision rendered by CIT(A) in all the three years in the hands of both the assessees. Appeals filed by the revenue are dismissed.
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