Source of Income- Section 9(vii)

[CA Rachit Agarwal]

If "A" the non resident of US, performs the professional services (Analysis and Testing) in US, in respect of goods exported from India to US. Payments received for such services from India. 

1. Services performed in US for goods lying in US and goods sold in US.

2. Payments received from India

In this case what will be source of Income for "A"- India or US for the purpose of Section 9(vii) of IT Act 1961

[Sucheta Agrawal]

Dear Mr. Rachit,

in my openion as per clause (b) of section 9 (vii) which privides that - b) a person who is a resident, except where the fees are payable in respect of services utilised in a business or profession carried on by such person outside India or for the purposes of making or earning any income from any source outside India ;  read with Explanation—For the removal of doubts, it is hereby declared that for the purposes of this section, income of a non-resident shall be deemed to accrue or arise in India under clause (v) or clause (vi) or clause (vii) of sub-section (1) and shall be included in the total income of the nonresident, whether or not,—

                 (i) the non-resident has a residence or place of business or business connection in India; or

                 (ii) the non-resident has rendered services in India, 

the source of income will be deemed in India  

AI Summary

Source of Income deemed in India when a non-resident is paid from India for services performed abroad.
Income received in India by a non-resident for professional services performed abroad is, subject to the specified exception for services utilised in a business carried on outside India or for earning income outside India, deemed to accrue or arise in India and is includible in the non-resident's total income whether or not the non-resident has a residence, place of business, business connection, or rendered services in India.