Income accruing or arising through or from business connection in India - Non-residents - Liability to tax under clause (i) of sub-section (1)

Business connection in India defines taxable income for non-residents; tax limited to profits attributable to Indian operations.

Section 9 deems income accruing or arising through or from any business connection in India to be income accruing in India, bringing non-resident income into the Indian tax net to the extent such profit can reasonably be attributed to operations in India. The existence of a business connection is fact-specific; examples include branches, agents, factories, local subsidiaries and close financial associations. Where transactions are genuinely on a principal-to-principal basis at arm's length and the resident or subsidiary acts on its own account, profits of the non-resident are not attributable to India. If sales are channelled through an Indian agent, assessment is limited to profit attributable to the agent's services after allowable expenses.