Law:

Section:

Section 2(24), read with sections 5 and 9, of the Income-tax Act, 1961 - Income - Definition of - Assessee, a non-resident company, was carrying on world-wide air-transport business - It sold some aircrafts, which were its capital assets, outside India - IAC held that profits arising out of such sale would come within purview of 'income' in hands of assessee - Whether expression 'income' as occurring in section 2(24) would include profits and gains and any capital gains chargeable under section 45 - Held, yes - Whether, however, in case of a non-resident, capital gain can be considered as an 'income' only if transaction takes place either in India or through or from any property in India or from any asset or source of income in India or through transfer of capital asset situate in India - Held, yes - Whether, in instant case, it would be impermissible to consider profit arising out of abovesaid sale as 'income' within meaning of section 2(24) since assessee's capital assets had nothing to do with its business connections in India - Held, yes Section 9 of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India - Whether on facts mentioned under heading 'Income - Definition of' it could be said that income to assessee accrued or arose in India - Held, no Interpretation of statutes - Rule of literal construction/Rule of beneficial construction FACTS The assessee was a non-resident company carrying on world-wide air-transport business. It maintained the centralized accounts in Australia. It sold some aircrafts, which were its capital assets. Such sales were effected outside India. The IAC held that the profits arising out of sale of capital assets would come within the purview of 'income' in the hands of the assessee. On appeal, the Commissioner (Appeals) and the Tribunal held in favour of the assessee. In instant reference application filed by the revenue, the assessee contended that its capital assets were purchased outside India and sale of such capital assets, being not connected with its business activity, no part of income could be said to have accrued within India. HELD The expression 'income' in terms of the interpretation clause (24) of…

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