TMI Blog2011 (7) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is clear and there is no ambiguity that the levy of concessional rate of tax is available only to the investment income derived from the foreign exchange asset - Decided against the assessee. - 759 OF 2004 - - - Dated:- 11-7-2011 - MRS. CHITRA VENKATARAMAN AND M.JAICHANDREN, JJ. Vikram Vijayaraghavan for the Appellant. J. Naresh Kumar for the Respondent. JUDGMENT Mrs. Chitra Venkataraman, J. The Tax Case Appeal relates to the assessment year 1996-97. 2. The assessee herein originally made investment in Bank out of the funds brought by him from abroad. Periodically, the assessee renewed the matured deposits along with the interest amount. The interest accrued thereon on the interest portion of the deposit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India, the same did not acquire the status of an investment made with foreign exchange. The Commissioner of Income-tax also rejected the reliance placed on the Reserve Bank of India's Circular dated 11-2-1987 that interest income could be equated to the bonus shares. He pointed out that when an investment is made in shares, the expectation is to earn dividend as well as bonus shares. The Reserve Bank of India's circular treated the bonus shares on par with foreign exchange assets. However, the same was not the case with dividend income received on the shares. Thus the assessment was set aside to enable the Assessing Officer to redo the assessment in accordance with law. Aggrieved by the same, the assessee went on appeal before the Income-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital gains arising from foreign exchange assets both procedural and substantive with an object of encouraging investment of the foreign exchange earnings in assets in India. Section 115-I gives an option to the non-resident Indian assessees to declare that the provisions of Chapter XII-A need not be applied to them. Section 115C defines foreign exchange asset investment income and specified assets as follows : "(b) foreign exchange asset means any specified asset which the assessee has acquired or purchased with, or subscribed to in, convertible foreign exchange ; (c) investment income-means any income derived, other than dividends referred to in section 115-O from a foreign exchange asset." (f) specified asset-means any of the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 139 for the assessment year for which he is so assessable, to the effect that the provisions of this Chapter shall continue to apply to him in relation to the investment income derived from any foreign exchange asset being an asset of the nature referred to in sub-clause (ii) or sub-clause (iii) or sub-clause (iv) or sub-clause (v) of clause (f) of section 115C; and if he does so, the provisions of this Chapter shall continue to apply to him in relation to such income for that assessment year and for every subsequent assessment year until the transfer or conversion (otherwise than by transfer) into money of such assets." Section 115H stipulates two conditions namely, (i) the assessee should file a declaration along with his return for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(2) suggests that the original source of the product has to be found. Thus, as a matter of plain English, when it is said that one word is derived from another, often in another language, what is meant is that the source of that word is another word, often in another language. As an illustration, the word "democracy" is derived from the Greek word "demos", the people and most dictionaries will so state. That is the ordinary meaning of the words "derived from" and there is no reason to depart from that ordinary meaning here." The interpretation given by the Apex Court applies on all fours to section 115H (i) to (v). 11. Learned counsel for the assessee strenuously argued that the interest income earned out of the capitalised interest al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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