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Income Which ‘Accrues’ Or ‘Arises’ In India under Income Tax Act. 1956.

 

Income can be held to accrue or arise to an assessee only when the assessee obtains a right to receive that income. No amount can be said to accrue unless it is actually due.

Accrue means “to fall as natural growth or increment, to come as an accretion or advantage” and arise means “to spring up, to come into existence” according to Oxford dictionary. It has been held that these two expressions—accrue and arise—are for all purposes synonymous. Jiwan Dass v. Commissioner of Income Tax, Lahore. [A.I.R. (1929) L4H 609].

Income accrues or arises at a place where the origin or source of growth of income is situated.

As regards salaries, income accrues or arises in India if it is earned in India.

            (i)         Income accrues or arises to a person, who is entitled to demand and receive the income.

            (ii)        Income accrues or arises at a time or date when it ripens into a debt, i.e., at that moment when assessee acquires a right to receive it.

            (iii)       In the case of salaried employees, the salary is earned in India if the person renders services in India. Income earned in India obviously arises in India.

            (iv)       In case of dealer of goods, if the purchases and sales of goods take place in India, the profits out of such sales arise in India.

            (v)        Profit from such transaction where goods are manufactured outside India but are sold in India will be split up into manufacturing profits and only mercantile profits, i.e., accruing from sale transaction will be income arising in India.
 
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