9. Income deemed to
accrue or arise in India.- (1) The following incomes
shall be deemed to accrue or arise in India :—
(i) all income accruing or arising, whether directly or indirectly,
through or from any business connection in India, or through
or from any property in India, or through or from any asset
or source of income in India, or through the transfer of a
capital asset situate in India.
Explanation 1.—For the purposes of this clause—
(a) in the case of a business of which all the operations
are not carried out in India, the income of the business deemed
under this clause to accrue or arise in India shall be only
such part of the income as is reasonably attributable to the
operations carried out in India ;
(b) in the case of a non-resident, no income shall be deemed
to accrue or arise in India to him through or from operations
which are confined to the purchase of goods in India for the
purpose of export ;
(c) in the case of a non-resident, being a person engaged
in the business of running a news agency or of publishing
newspapers, magazines or journals, no income shall be deemed
to accrue or arise in India to him through or from activities
which are confined to the collection of news and views in
India for transmission out of India ;
(d) in the case of a non-resident, being—
(1) an individual who is not a citizen of India ; or
(2) a firm which does not have any partner who is a citizen
of India or who is resident in India ; or
(3) a company which does not have any shareholder who is a
citizen of India or who is resident in India,
no income shall be deemed to accrue or arise in India to
such individual, firm or company through or from operations
which are confined to the shooting of any cinematograph film
in India.
Explanation 2.—For the removal of doubts, it is hereby
declared that “business connection” shall include
any business activity carried out through a person who, acting
on behalf of the non-resident,—
(a) has and habitually exercises in India, an authority
to conclude contracts on behalf of the non-resident, unless
his activities are limited to the purchase of goods or merchandise
for the non-resident; or
(b) has no such authority, but habitually maintains in India
a stock of goods or merchandise from which he regularly delivers
goods or merchandise on behalf of the non-resident; or
(c) habitually secures orders in India, mainly or wholly
for the non-resident or for that non-resident and other non-residents
controlling, controlled by, or subject to the same common
control, as that non-resident:
Provided that such business connection shall not include
any business activity carried out through a broker, general
commission agent or any other agent having an independent
status, if such broker, general commission agent or any other
agent having an independent status is acting in the ordinary
course of his business :
Provided further that where such broker, general commission
agent or any other agent works mainly or wholly on behalf
of a non-resident (hereafter in this proviso referred to as
the principal non-resident) or on behalf of such non-resident
and other non-residents which are controlled by the principal
non-resident or have a controlling interest in the principal
non-resident or are subject to the same common control as
the principal non-resident, he shall not be deemed to be a
broker, general commission agent or an agent of an independent
status.
Explanation 3.—Where a business is carried on in India
through a person referred to in clause (a) or clause (b) or
clause (c) of Explanation 2, only so much of income as is
attributable to the operations carried out in India shall
be deemed to accrue or arise in India;
(ii) income which falls under the head “Salaries”,
if it is earned in India.
Explanation.—For the removal of doubts, it is hereby
declared that the income of the nature referred to in this
clause payable for—
(a) service rendered in India; and
(b) the rest period or leave period which is preceded and
succeeded by services rendered in India and forms part of
the service contract of employment,
shall be regarded as income earned in India ;
(iii) income chargeable under the head “Salaries”
payable by the Government to a citizen of India for service
outside India ;
(iv) a dividend paid by an Indian company outside India ;
(v) income by way of interest payable by—
(a) the Government ; or
(b) a person who is a resident, except where the interest
is payable in respect of any debt incurred, or moneys borrowed
and used, for the purposes of a business or profession carried
on by such person outside India or for the purposes of making
or earning any income from any source outside India ; or
(c) a person who is a non-resident, where the interest is
payable in respect of any debt incurred, or moneys borrowed
and used, for the purposes of a business or profession carried
on by such person in India ;
(vi) income by way of royalty payable by—
(a) the Government ; or
(b) a person who is a resident, except where the royalty
is payable in respect of any right, property or information
used or services utilised for the purposes of a business or
profession carried on by such person outside India or for
the purposes of making or earning any income from any source
outside India ; or
(c) a person who is a non-resident, where the royalty is
payable in respect of any right, property or information used
or services utilised for the purposes of a business or profession
carried on by such person in India or for the purposes of
making or earning any income from any source in India :
Provided that nothing contained in this clause shall apply
in relation to so much of the income by way of royalty as
consists of lump sum consideration for the transfer outside
India of, or the imparting of information outside India in
respect of, any data, documentation, drawing or specification
relating to any patent, invention, model, design, secret formula
or process or trade mark or similar property, if such income
is payable in pursuance of an agreement made before the 1st
day of April, 1976, and the agreement is approved by the Central
Government :
Provided further that nothing contained in this clause shall
apply in relation to so much of the income by way of royalty
as consists of lump sum payment made by a person, who is a
resident, for the transfer of all or any rights (including
the granting of a licence) in respect of computer software
supplied by a non-resident manufacturer along with a computer
or computer-based equipment under any scheme approved under
the Policy on Computer Software Export, Software Development
and Training, 1986 of the Government of India.
Explanation 1.—For the purposes of the first proviso,
an agree-ment made on or after the 1st day of April, 1976,
shall be deemed to have been made before that date if the
agreement is made in accordance with proposals approved by
the Central Government before that date; so, however, that,
where the recipient of the income by way of royalty is a foreign
company, the agreement shall not be deemed to have been made
before that date unless, before the expiry of the time allowed
under sub-section (1) or sub-section (2) of section 139 (whether
fixed originally or on extension) for furnishing the return
of income for the assessment year commencing on the 1st day
of April, 1977, or the assessment year in respect of which
such income first becomes chargeable to tax under this Act,
whichever assessment year is later, the company exercises
an option by furnishing a declaration in writing to the Assessing
Officer (such option being final for that assessment year
and for every subsequent assessment year) that the agreement
may be regarded as an agreement made before the 1st day of
April, 1976.
Explanation 2.—For the purposes of this clause, “royalty”
means consideration (including any lump sum consideration
but excluding any consideration which would be the income
of the recipient chargeable under the head “Capital
gains”) for—
(i) the transfer of all or any rights (including the granting
of a licence) in respect of a patent, invention, model, design,
secret formula or process or trade mark or similar property
;
(ii) the imparting of any information concerning the working
of, or the use of, a patent, invention, model, design, secret
formula or process or trade mark or similar property ;
(iii) the use of any patent, invention, model, design, secret
formula or process or trade mark or similar property ;
(iv) the imparting of any information concerning technical,
industrial, commercial or scientific knowledge, experience
or skill ;
(iva) the use or right to use any industrial, commercial or
scientific equipment but not including the amounts referred
to in section 44BB;
(v) the transfer of all or any rights (including the granting
of a licence) in respect of any copyright, literary, artistic
or scientific work including films or video tapes for use
in connection with television or tapes for use in connection
with radio broadcasting, but not including consideration for
the sale, distribution or exhibition of cinematographic films
; or
(vi) the rendering of any services in connection with the
activities referred to in sub-clauses (i) to (iv), (iva) and
(v).
Explanation 3.—For the purposes of this clause, “computer
software” means any computer programme recorded on any
disc, tape, perforated media or other information storage
device and includes any such programme or any customized electronic
data;
(vii) income by way of fees for technical services payable
by—
(a) the Government ; or
(b) a person who is a resident, except where the fees are
payable in respect of services utilised in a business or profession
carried on by such person outside India or for the purposes
of making or earning any income from any source outside India
; or
(c) a person who is a non-resident, where the fees are payable
in respect of services utilised in a business or profession
carried on by such person in India or for the purposes of
making or earning any income from any source in India :
Provided that nothing contained in this clause shall apply
in relation to any income by way of fees for technical services
payable in pursuance of an agreement made before the 1st day
of April, 1976, and approved by the Central Government.
Explanation 1.—For the purposes of the foregoing proviso,
an agreement made on or after the 1st day of April, 1976,
shall be deemed to have been made before that date if the
agreement is made in accordance with proposals approved by
the Central Government before that date.
Explanation 2.—For the purposes of this clause, “fees
for technical services” means any consideration (including
any lump sum consi-deration) for the rendering of any managerial,
technical or consultancy services (including the provision
of services of technical or other personnel) but does not
include consideration for any construction, assembly, mining
or like project undertaken by the recipient or consideration
which would be income of the recipient chargeable under the
head “Salaries”.
(2) Notwithstanding anything contained in sub-section (1),
any pension payable outside India to a person residing permanently
outside India shall not be deemed to accrue or arise in India,
if the pension is payable to a person referred to in article
314 of the Constitution or to a person who, having been appointed
before the 15th day of August, 1947, to be a Judge of the
Federal Court or of a High Court within the meaning of the
Government of India Act, 1935, continues to serve on or after
the commencement of the Constitution as a Judge in India.
Explanation.—For the removal of doubts, it is hereby
declared that for the purposes of this section, income of
a non-resident shall be deemed to accrue or arise in India
under clause (v) or clause (vi) or clause (vii) of sub-section
(1) and shall be included in the total income of the non-resident,
whether or not,—
(i) the non-resident has a residence or place of business
or business connection in India; or
(ii) the non-resident has rendered services in India.
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