Law:

Section:

Section 9 of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India - Assessment years 1990-91 and 1991-92 - Whether expression 'by such person' appearing in section 9(1)(vii)(b) refer to recipient of income and not to person making payment - Held, yes - Whether an income received by non-resident (such person) by way of a payment from a resident Indian for technical services rendered to him would be subject to Indian income-tax only if it satisfies twin test, namely, that income was received in respect of services (i) rendered in India, and (ii) utilized in India or has such a live link with India that it can be treated as accrued or arisen in India - Held, yes - Petitioner No. 1, an Indian company, entered into technical assistance agreement with petitioner No. 2, an American company under which petitioner No. 2 agreed to render petitioner No. 1 outside India certain engineering and other related services in relation to its sponge iron plant in India - In accordance with agreement, petitioner No. 2 delivered total basic engineering package to representative of petitioner No. 1 in USA between November 1989 and August 1990 and also imparted training to 22 keys personnel of petitioner No. 1 in Mexico - As a consideration, petitioner No. 1 paid certain amount to petitioner No. 2 - Whether income received by petitioner No. 2 could not be deemed to have arisen or accrued in India because services under agreement were not rendered within India though drawings, designs received from petitioner No. 2 might have been utilized by petitioner No. 1 in India - Held, yes Words and Phrases : Expression 'by such person' as occurring in section 9(1)(vii)(b) of the Income-tax Act, 1961 FACTS Petitioner No. 1, which was an Indian company, being desirous of setting up a sponge iron plant in India entered into a technical assistance agreement with petitioner No. 2, an American company. Under that agreement, petitioner No. 2 agreed to render to petitioner No. 1 outside India certain engineering and other related services in relation to the sponge iron plant. By the agreement petitioner No. 2 was to prepare basic engineering drawings specifications, calculation and…

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