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Income from transfer of capital assets situated in India

[ Income Deemed To Accrue Or Arise In India]


Any gain arising from a capital asset whether movable or immovable shall be deemed to accrue in India in case the capital asset is situated in India at the time of transfer. It is immaterial that agreement is entered outside India or consideration is paid outside India.

Apportionment of profits [Explanation (d) to section 9(1)(i)]

In the case of a business of which all the operations are not carried in India, only that part of income shall be deemed to accrue or arise in India which is reasonably attributable to the operations carried on in India.

Where the goods are manufactured in India and were sold out side India, the profit will be apportioned in two parts—one for manufacturing operations and another for selling operations. The profits which could be reasonably attributed to selling operations will not be deemed to accrue in India. (C.I.T. v. Ahmedbhai Umerbhai 18 I.T.R. 472).

In cases where the income attributable to operations carried out in India cannot be ascertained, Rule 10 of Income-tax Rules 1962 provides

            (a)        such percentage of the turnover so accruing or arising as the Assessing Officer may consider to be reasonable having regard to the facts and circumstances of the case; or

            (b)        any amount which bears the same proportion to the total profits and gains of the business of the assessee computed in accordance with the provisions of the Act as the receipts so- accruing or arising bear to the total receipts of the business; or

            (c)        in such other manner as the Assessing Officer may deem suitable.
More Topics.. @ Tax Concept
Types of Income under Income Tax Act. 1956.
Income Deemed To Be Received In India under I.Tax Act.
Income Which ‘Accrues’ Or ‘Arises’ In India under I.Tax Act.
[Section 9(1)(i)] - Income Arising From Business Connection In India
Income from any property held in India and assets or sources of income located in India
Income from transfer of capital assets situated in India
[Section 9(1)(ii)] - Salaries earned in India
[Section 9(1 )(iii)] - Salaries For Government Service Outside India
[Section 9(1)(iv)] - Dividend paid abroad by Indian Company
[Section 9(1 )(v)] - Income By Way Of Interest
[Section 9(1)(vi)] - Income By Way Of Royalty
[Section 9(1 )(vii)] - Income By Way Of Fees For Technical Services
Agricultural Income [Section 2(1A)] - Definition under I.Tax
Assessment Year [Section 2(9)] - Definations under I.Tax.
Constitutional Provision Governing Taxation in India
Gross Total Income [Section-80B (5) ] - Definations under I.Tax.
Heads of Income [Section-14 ] - Definations under I.Tax.
Income is Taxed in the same Year in which it is earned
Income [Section 2(24)] - Definations under I.Tax.
Person [Section 2(31)] - Definations under I.Tax.
Previous Year [Section 2(34) r.w. Section 3] - Definations under I.Tax.
Sources Of Law Relating To Income Tax
Taxes to be imposed only by Authority of Law
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