Law:

Section:

Section 5 of the Income-tax Act, 1961 - Income - Accrual of - Assessee, resident of Africa, with a view to taking advantage of national defence remittance scheme remitted certain amounts to India by opening accounts with bank of India - Such deposits were kept in his non-resident account, hut after amendment of section 10(4A), whereby exemption was restricted to interest on moneys deposited in a nonresident (external) account only, assesses requested his bankers to convert his nonresident account into a non-resident (external) account with effect from 1-4-1968 -Assessee's bankers, however, referred matter to Reserve Bank of India, and on instructions of assessee, till RBI's consent was obtained on 7-12-1972, interest accrued on said deposits was transferred to suspense account at intervals of six months - Whether, once amount of interest was credited even temporarily in assessee's nonresident account it was by way of receipt or deemed receipt within meaning of section 5(2)(A) in relevant assessment years, and entire amount of interest received by assessee could not be taxed in assessment year 1973-74 in which year RBI consented to transfer of said amount - Held, yes Facts The assessee, resident of Africa, with a view to taking advantage of the National Defence Remittance Scheme remitted certain amounts to India by opening accounts with the Bank of India at Rajkot and Bombay. The assessee mainly operated the Rajkot account. The deposits were kept in his non-resident account, but after the amendment of section 10(4A), the exemption was restricted to interest on moneys deposited in a nonresident (external) account only. In view of this change in law, the assessee requested his bankers to convert his non-resident account into a non-resident (external) account with effect from 1-4-1968. However, as the assessee's bankers entertained some doubt in this behalf, the issue was referred to the RBI and in the meantime, with the consent of the assessee, the interest amount was transferred to the suspense account with the bank after every six months with a view to obviating the bank's liability to deduct income-tax at source from the interest amount in the assessee's…

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