“Section 9(1)(6)”
The decision most relied on for Section 9(1)(6) is Parimisetti Seetharamamma v. CIT (57 ITR 532), cited in 142 judgments on BharatTax.
Leading authorities on Section 9(1)(6)
Not all receipts constitute income chargeable to tax. An Assessing Officer cannot reject a prima facie reasonable explanation on mere probabilities or arbitrary grounds, but must disprove facts.
Allotment of shares to employees under an Employee Stock Option Plan (ESOP) before April 1, 2000, is not a taxable perquisite if the benefit's value is unascertainable at the time of option exercise due to conditions like a lock-in period.
If a Dependent Agency Permanent Establishment (DAPE) is remunerated at arm's length based on transfer pricing principles, no further profits can be attributed to the foreign enterprise. The principles of profit attribution under DTAA Article 7 are pari-materia to Section 9(1)(i) of the Income Tax Act.
Once the arm's length principle has been satisfied under transfer pricing provisions, no further profit can be attributed to a person even if they have a permanent establishment in India. A reassessment notice based solely on the allegation of a permanent establishment is unsustainable if the arm's length price procedure has been followed.
An assessee found to be the owner of bullion, etc., must explain its source. The Income Tax Officer must find the assessee to be the owner, not merely in possession.
Salary received by a non-resident for services rendered outside India accrues outside India and is not taxable in India. Only salary earned for work performed in India is regarded as income arising in India and is taxable.
Retrospective amendments to Section 9(1)(vi) of the Income-tax Act, introducing Explanations 5 and 6 regarding royalty income, do not automatically apply to Double Taxation Avoidance Agreements (DTAAs) if the DTAAs themselves have not been correspondingly amended.
Commission paid to non-resident agents for services rendered outside India is not taxable in India as income not accruing or arising in India and not being fees for technical services. Consequently, no tax deduction at source under Section 195 is required, and non-deduction does not attract disallowance under Section 40(a)(i)/(ia).
