Business connection: in-country operations must be shown to tax non-resident under deeming provision; prior instruction withdrawn

The Supreme Court held that services made available abroad by a foreign company do not amount to business carried on in India and that to attract the deeming provision the Department must prove some operations were carried out in India; absent such finding the provision is not attracted. The Board withdrew the prior instruction treating entire receipts as Indian-sourced and directed continuation of the practice of taxing non-residents only on profit attributable to operations in India, with concessions or withdrawals of appeals where reopenings relied on the Madras High Court view.

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