TMI Blog2022 (12) TMI 738X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stated in brief. This is a second round of proceedings in the hands of both the assessees. It came to the notice of the Government that both the assessees are holding a bank account jointly in HSBC Bank, Geneva. It was noticed that some deposits have been made in this bank account during the years relevant to A.Y. 2003-04 2004-05. In the three years under consideration namely A.Y. 2006-07 to 2008-09 interest has been credited on the deposits so made in the above said bank account. In the first round, the deposit amounts as well as interest income accrued on the above said deposits were assessed in the hands of the assessees dividing the same equally. The above said assessments were challenged by filing appeals before the learned CIT(A), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax in India. 4. We heard the parties and perused the record. There is no dispute with regard to the fact that the status of both the assessees under the Income tax Act is Non Resident . Section 5(2) of the Income tax Act defines the scope of total income, i.e., the income which can be taxed in India in the hands of non residents . The said Section reads as under:- (2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non- resident includes all income from 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rried on by such person outside India or for the purposes of making or earning any income from any source outside India; or (c) a person who is a non- resident, where the interest is payable in respect of any debt incurred, or moneys borrowed and used, for the purposes of a business or profession carried on by such person in India; . 6. 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) of the Income tax Act. No doubt that the income deemed to accrue or arise to a non resident in India is liable to be taxed in India. However, the question is whether the interest income accrued on a deposit kept in a foreign bank account can be considere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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