Page 40 - DCOM508_CORPORATE_TAX_PLANNING

Unit 2: Residential Status and Taxation

Notes
Example 5: The following details are known about the total income of Ms. Mamta:
Dividend received from Indian Company ` 1, 00,000
Dividend from foreign company ` 1, 50,000

Income from business in Kenya but controlled from India ` 2, 00,000
Income from business in Switzerland controlled from Bangladesh 5, 00,000
Income accrued in Indonesia ` 2, 00,000, 2/5 received in India.
th
Solution:

S. No Particulars ROR NOR NRI
1 Dividend received from Indian Company - - -
2 Dividend from foreign company 1,50,000 1,50,000 1,50,000
3 Income from business in Kenya but controlled from India 2,00,000 2,00,000 NIL
4 Income from business in Switzerland controlled from 5,00,000 - -
Bangladesh
5 Income accrued in Indonesia, 2/5th received in India 2,50,000 1,00,000 1,00,000
Total Taxable Income 11,00,000 4,50,000 2,50,000

Self Assessment

State which of the following is taxable in hands of a non-resident of India:

10. Income received or deemed to be received in India whether earned in India or elsewhere.
11. Income which accrues or arise or deemed to accrue or arise in India during the previous
year, whether received in India or elsewhere.

12. Income which accrues or arises outside India and received outside India in the previous
year from any other source.
13. Income which accrues or arises outside India and received outside India during the years
preceding the previous year and remitted to India during the previous year.

2.4 Scope of Income

Section 5 provides the scope of total income in terms of the residential status of the assessee
because the incidence of tax on any person depends upon his residential status. The scope of total
income of an assessee depends upon the following three important considerations:
(i) the residential status of the assessee;
(ii) the place of accrual or receipt of income, whether actual or deemed; and
(iii) the point of time at which the income had accrued to or was received by or on behalf of the
assessee.
The ambit of total income of the three classes of assesses would be as follows:
1. Resident and ordinarily resident: The total income of a resident assessee would, under
section 5(1), consist of:

(i) income received or deemed to be received in India during the previous year;
(ii) income which accrues or arises or is deemed to accrue or arise in India during the
previous year; and

LOVELY PROFESSIONAL UNIVERSITY 35