Section 9(1)(vii)(b) of the Income Tax Act
Income-tax Act, 2025: s.9
Section 9(1)(vii)(b) 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)(vii)(b) is CIT v. Havells India Ltd. (352 ITR 376), cited in 97 of the 75 judgments on BharatTax that turn on this section.
Leading authorities on Section 9(1)(vii)(b)
For royalty income, especially in the context of Double Taxation Avoidance Agreements (DTAA), the 'source of income' is the determinative factor for taxability, rather than merely the 'source of receipt'.
The case elucidates the meaning of 'management services', detailing its components and considering whether such services qualify as 'technical services' for income tax purposes, particularly in relation to fees for technical services.
Payments made for services that are utilized for earning income from outside India, where the customers are foreign-based companies, are not taxable in India as Fees for Technical Services, particularly when excluded by Section 9(1)(vii)(b) of the Income-tax Act.
Receipts of a non-resident for technical services are not taxable in India if the services are not utilized in India, even after retrospective amendments to Section 9. The condition of utilization of services in India remains a prerequisite for taxing such income.
Management services involve the act of managing by direction, regulation, or superintendence, essentially controlling, directing, or administering a business.
Payments made by a resident Indian to foreign attorneys for services rendered outside India are not taxable in India as fees for technical services (FTS) if the income of the foreign attorneys is outside India.
