Section 9(1)(i) of the Income Tax Act

Income-tax Act, 2025: s.9

Section 9(1)(i) falls under section 9 of the Income-tax Act, 1961, which corresponds to section 9 (Income deemed to accrue or arise in India) of the Income-tax Act, 2025.

Read section 9 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 9(1)(i) is CIT v. Toshoku Ltd. (125 ITR 525), cited in 270 of the 479 judgments on BharatTax that turn on this section.

Leading authorities on Section 9(1)(i)

CIT v. Toshoku Ltd.
125 ITR 525 · 1980 · Supreme Court
270
citing judgments

A non-resident commission agent is not chargeable to tax in India on commission income if no business operations are carried out in India. Consequently, no TDS is required under Section 195 on such payments.

CIT v. R.D. Aggarwal and Co.
56 ITR 20 · 1965 · Supreme Court
156
citing judgments

A 'business connection' for non-residents requires a real and intimate relation between their trading activities outside India and activities within India, contributing directly or indirectly to their earnings. The Supreme Court assigned a wide meaning to this term.

Carborandum Co. v. CIT
108 ITR 335 · 1977 · Supreme Court
87
citing judgments
CIT(A) v. Eon Technology Pvt. Ltd.
343 ITR 366 · 2012 · High Court
58
citing judgments

Payments to a non-resident agent for services rendered outside India, where the agent has no permanent establishment (PE) or business connection in India, are not chargeable to tax in India. Consequently, there is no obligation to deduct tax at source under Section 195, and no disallowance under Section 40(a)(i) can be made.

G.V.K. Industries Ltd. v. ITO
228 ITR 564 · 1997 · High Court
41
citing judgments

A 'business connection' for a non-resident requires continuity of activity or operations and a real, intimate relation between the non-resident's business outside India and its activities in India, rather than merely isolated or stray transactions.

DIT v. Galileo International Inc.
224 CTR 251 · High Court
37
citing judgments

If the income attributable to a Permanent Establishment (PE) in India is less than the remuneration paid to a dependent agent, the assessment is extinguished and no further computation of income is required.

US Technology Resources (P) Ltd. v. CIT
97 Taxmann.com 642 · 2018 · High Court
34
citing judgments

Payments for advice on management, financial, or legal services, offered on a factual basis without transferring technical know-how, are not taxable in India as fees for technical services.

Evolv Clothing Company Private Limited v. ACIT
407 ITR 72 · 2018 · High Court
29
citing judgments

Payments for market surveys conducted for the purpose of procuring orders on a commission basis are not fees for technical services under section 9(1)(vii) of the Income Tax Act, 1961, as they are incidental to the business activity and do not involve the 'make available' clause.

ACIT v. Clough Engineering Ltd.
11 Taxmann.com 70 · 2011 · High Court
29
citing judgments

The Special Bench decision in ACIT vs. Clough Engineering Ltd. interprets treaty provisions and the expression 'in connection with PE' for taxability. It is not applicable when income is offered under domestic provisions and not disputed.

Seth Pushalal Mansighka (P.) Ltd. v. CIT
66 ITR 159 · 1967 · Supreme Court
22
citing judgments

Income accrues at the place where title to goods passes to the buyer upon payment of the price. For offshore supply of equipment, if the transaction is completed outside India, no income accrues to the assessee in India.

Judgments on Section 9(1)(i)

Tdk Electronics Ag (Formerly Known As Epcos Ag), Nashik vs. Assistant Commissioner of Income Tax(International Taxation), Circle-2, Pune

In the result, appeal of the assessee stands allowed

ITA 174/PUN/2023[2020-21]Status: DisposedITAT Pune23 May 2023AY 2020-21

Bench: Shri R.S. Syal, Hon. Vice- & Shri Partha Sarathi Chaudhury, Hon.Tdk Electronics Ag Vs Acit (International (Formerly Known As Epcos Taxation), Circle-2, Ag), C/O Epcos India Pvt. Ltd., Pune. E 22-25, Midc Satpur, Nashik. Pan: Aaace 9787 H Appellant/Assessee Respondent /Revenue Assessee By : Shri Siddhesh Chaugule, Ar Revenue By : Shri M.M. Chate, Cit-Dr Date Of Hearing : 22/05/2023 Date Of Pronouncement : 23/05/2023 O R D E R Per Partha Sarathi Chaudhury, Jm: This Appeal Preferred By The Assessee Emanates From The Findings Of Ld. Drp-3, Mumbai-2, Dated 20.12.2022 For A.Y. 2020-21 As Per The Following Grounds Of Appeal: “Ground No.1 - Erroneous Levy Of Income Tax & Interest Thereon 1.1. The Assistant Commissioner Of Income-Tax (International Taxation) - Circle 2, Pune ('The Learned. Ao') Has Erred In Law & On Facts In: A. Holding That The Appellant Has A Permanent Establishment (Pe) In India & Its Income From Royalty & Fees For Technical Services (Fts) Is Taxable Under Section 115A R.W.S. 44Da Of The Income Tax Act, 196 I ('The Act'); B. Levying Income Tax Including Interest Under Section 234A & Section 234B Of The Act & Raising A Net Demand Payable Of Rs.7,22,18,080 Upon The Appellant. Ground No.2 - Non-Constitution Of Permanent Establishment ('Pe') Of The Appellant In India Tdk Electronics Ag

For Appellant: Shri Siddhesh Chaugule, ARFor Respondent: Shri M.M. Chate, CIT-DR
Section 115ASection 234ASection 234BSection 9(1)(i)