Section 9 of the Income Tax Act
Income-tax Act, 2025: s.9
Section 9 of the Income-tax Act, 1961 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 is Commissioner of Income Tax v. Nova Promoters and Finlease (P) Ltd. (342 ITR 169), cited in 658 of the 529 judgments on BharatTax that turn on this section.
Leading authorities on Section 9
To make an addition under Section 68 for unexplained cash credits, the Assessing Officer must conduct proper inquiry into the identity, genuineness, and creditworthiness of the creditor, especially concerning share application money. The assessee's initial discharge of burden by providing necessary details shifts the onus back to the AO for further investigation, including the source of source.
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.
Until the Finance Act, 2010 amendment to Section 9(2), services rendered by a non-resident had to be rendered in India for income to accrue or arise in India, and thus attract TDS obligations.
The obligation to deduct tax at source under Section 195 for payments to non-residents arises only when the sum is chargeable to tax in India. If the income is not assessable to tax in India, there is no requirement to deduct tax at source.
The Supreme Court's decision in DIT Vs. Mitshubishi Corporation covers the chargeability of interest under section 234B of the Act.
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.
An Assessing Officer may reject the genuineness of a transaction if the evidence provided by the assessee is not trustworthy, even if the transaction appears to be conducted through cheques or other formal means. The burden of proving the genuineness of a transaction lies primarily on the assessee.
If a payment made by a resident to a non-resident is not chargeable to tax in India, then no tax is deductible at source, even if no application has been made under section 195(2). Taxability is a prerequisite for tax deduction at source.
An Assessing Officer cannot selectively accept parts of an assessee's statement that favour the revenue while disregarding parts favourable to the assessee. If an assessee presents all records, the AO must consider all explanations, not just pick and choose.
The scheme of TDS applies to gross sums payable, even if the entire amount isn't income for the recipient, where income tax is leviable on that sum. This includes payments to contractors where the entire sum may not be income of the recipient.