Section 209(1)(d) of the Income Tax Act
Income-tax Act, 2025: s.405
Section 209(1)(d) falls under section 209 of the Income-tax Act, 1961, which corresponds to section 405 (Computation of advance tax) of the Income-tax Act, 2025.
Read section 405 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 209(1)(d) is National Petroleum Construction Company v. DIT (383 ITR 648), cited in 69 of the 86 judgments on BharatTax that turn on this section.
Leading authorities on Section 209(1)(d)
An Indian agent providing marketing services, without the authority to conclude contracts on behalf of a foreign company, does not constitute a Dependent Agent Permanent Establishment (DAPE) for the foreign company in India under DTAA provisions.
When contractual obligations are for an entire project, only the income reasonably attributable to operations carried on in India is deemed to accrue or arise in India and falls within the tax net. This principle applies even in consortium arrangements where members have broader contractual roles, and income from supply of equipment should be characterized appropriately.
A non-resident entity's activities in India are assessed for Permanent Establishment (PE) under Double Taxation Avoidance Agreements, considering types like fixed place, construction, and agency PE, and the applicability of presumptive taxation under sections such as 44BBB.
Profits are not wholly made by the act of sale and do not necessarily accrue at the place of sale; profits attributable to manufacturing operations accrue where the business operations are carried on.
The Department bears the onus to prove the existence of a Permanent Establishment (PE).
The onus is on the revenue to prove the existence of a Permanent Establishment (PE) in India.
This case is authority for the proposition that the number of days spent by foreign enterprise in India should be counted based on the actual presence of employees or personnel, not by aggregating common days spent by multiple individuals.
Income that is considered business income for tax purposes must be computed on a net basis, accounting for expenses incurred to earn that income, and cannot be taxed in India on a gross basis.
A business connection is established when there is a real and intimate relationship between the trading activities of a non-resident outside India and activities within India that contribute to the earning of income, with an element of continuity.
Income from offshore supply is not taxable in India if the Permanent Establishment (PE) in India had no role in securing or facilitating that supply. The separate nature of offshore and onshore contracts is relevant to this determination.
