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Unit 2: Residential Status and Taxation

Explanation 6 clarifies that the term “process” includes and shall be deemed to have Notes
always included transmission by satellite (including up-linking, amplifi cation, conversion
for down-linking of any signal), cable, and optic fibre or by any other similar technology,

whether or not such process is secret.
8. Fees for technical services: Any fees for technical services will be deemed to accrue or arise
in India if they are payable by -

(i) the Government;
(ii) a person who is resident in India, except in cases where the fees are payable in respect
of technical services utilised in a business or profession carried on by such person
outside India or for the purpose of making or earning any income from any source
outside India;
(iii) a person who is a non-resident, only where the fees are payable in respect of services
utilised in a business or profession carried on by the non-resident in India or where
such services are utilised for the purpose of making or earning any income from any
source in India.
A fee for technical services means any consideration (including any lump sum
consideration) for the rendering of any managerial, technical or consultancy services
(including providing the services of technical or other personnel). However, it 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’.
Income deemed to accrue or arise in India to a non-resident by way of interest, royalty
and fee for technical services to be taxed irrespective of territorial nexus (Explanation to
section 9)

Income by way of interest, royalty or fee for technical services which is deemed to accrue
or arise in India by virtue of clauses (v), (vi) and (vii) of section 9(1), 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.

In effect, the income by way of fee for technical services, interest or royalty, from services utilised
in India would be deemed to accrue or arise in India in case of a non-resident and be included in
his total income, whether or not such services were rendered in India.
Self Assessment

State whether the following statements are true or false:
22. The expression “business connection” has been explained in Explanation 2 to section
9(1)(i).

23. Any income which arises from any property which may be either movable, immovable,
tangible or a intangible property would not considered to be deemed to accrue or arise in
India.

24. All dividends paid by an Indian company must be deemed to accrue or arise in India.
25. The term ‘royalty’ means consideration also including any lump sum consideration but
excluding any consideration which would be the income of the recipient chargeable under
the head ‘Capital gains’.

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