Meaning of Income Received or Deemed to be Received

Bird’s Eye view of the ‘Meaning of Income Received or Deemed to be Received’

Meaning of “Income Received or Deemed to be Received”

Income received or deemed to be received in India, during the previous year is taxable in hands of all Assessees irrespective of –

• whether the assessee is a resident or non-resident, such income is taxable; and
• whether such income accrued in India or such income accrue outside India, it is still taxable in India.

In this context, the receipt of income,  refers to first occasion, when recipient gets the control of money. Once the amount has been received as income, remittance or transmission of such funds which have been received from one place to another place, or from one person to another person , does not constitute receipt of income at subsequent place, or in the hands of the subsequent recipient.

Example 1 : –

Mr. Shiva a non-resident, sold his property which is situated in UK, and the sale proceeds from such property were credited to his bank account in UK. Subsequently, the sale proceeds were transferred to his  bank account in India. Whether receipt of such sale proceeds  of property were taxable in India?

Solution : –

The receipt of income refers to only the first occasion when the recipient gets the money under his control. The first occasion when Mr. Shiva gets the money under his control was at the time when such income was transferred to his bank account in UK. Such sale proceeds are not taxable in India as such income is first received outside India (i.e, in UK). Subsequent remittance   of such funds   from UK to India,  does not constitute receipt of income in India.

Example 2 : –

Mr. Raju was a non-resident for Indian for tax purposes. He sold his property situated in Singapore and credited the amount to his bank account in India. Subsequently, such sale proceeds were transferred to his bank account in UK. Whether such sale proceeds are taxable in India ?

Solution : –

The receipt of income refers to only the first occasion when the recipient gets the money under his control. The first occasion when Mr. Raju gets the money under his control was when such income was credited to his bank account in India. Such sale proceeds are taxable in India as such income is first received in India.

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