Computation of royalty and technical service income as business profits when connected with a permanent establishment, requiring local accounting. Income by way of royalty or fees for technical services received by a non-resident or foreign company shall be computed under the head 'Profits and gains of business or profession' where the recipient carries on business in India through a permanent establishment or performs professional services from a fixed place of profession and the royalties or fees are effectively connected with that permanent establishment or fixed place of profession. Deductions are restricted to expenditures wholly and exclusively incurred for that business, and remittances to head office or other offices (other than reimbursements of actual expenses) are non-allowable. Such non-residents must keep books of account, have accounts audited, and furnish the audit report with their return.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Computation of royalty and technical service income as business profits when connected with a permanent establishment, requiring local accounting.
Income by way of royalty or fees for technical services received by a non-resident or foreign company shall be computed under the head "Profits and gains of business or profession" where the recipient carries on business in India through a permanent establishment or performs professional services from a fixed place of profession and the royalties or fees are effectively connected with that permanent establishment or fixed place of profession. Deductions are restricted to expenditures wholly and exclusively incurred for that business, and remittances to head office or other offices (other than reimbursements of actual expenses) are non-allowable. Such non-residents must keep books of account, have accounts audited, and furnish the audit report with their return.
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