“Section 4(3)(vii)”

Payments by Indian residents to non-resident foreign software suppliers for software are considered royalty, constituting income deemed to accrue in India under section 9(1)(v), thereby requiring tax deduction at source under section 195.

For fees for technical or consultancy services to 'make available' technical knowledge or know-how under a DTAA, the service must transmit such knowledge, allowing the recipient to derive an enduring benefit and utilize it independently in the future.

Expenditure incurred by an assessee operating a composite business that generates both taxable and non-taxable income is fully allowable without apportionment. This position led to the subsequent insertion of Section 14A, which disallowed expenditure related to earning exempt income.

Circulars and instructions issued by the Central Board of Direct Taxes (CBDT) under Section 119 of the Income Tax Act have the force of law and are binding on all income tax authorities. These circulars can mitigate the rigour of statutory provisions, provide administrative relief, and ensure uniform application of the Act for the benefit of the assessee.

Managerial services are not considered 'fees for included services' under Article 13(4) of the India-UK Double Taxation Avoidance Agreement, thus payments for such services are not taxable as FTS under the treaty.

This case establishes that a statutory amendment, specifically Section 9(1)(ii) relating to income deemed to accrue or arise in India (salary for services/leave), applies prospectively from its effective date, such as April 1, 2000.

Assessments cannot be based merely on assumptions, suspicion, guesswork, or conjecture without corroborative material. Additions require evidence to support conclusions.

Advice, such as that provided by a lawyer or a financial consultancy firm on loan modalities, constitutes 'technical service'. This interpretation is relevant in the context of fees for technical services, especially under tax treaties.