Law:

Section:

Section 9, read with section 163(1) of Income-tax Act, 1961 - Income - Deemed to accrue or arise in India - In terms of agreement, 'IE' i.e. a non resident appointed assessee-company as its agent for certain Indian territories for mediating export transactions of products manufactured by it abroad and to be sold in Indian territories - ITO held that there was a business connection between assessee-company and 'IE' and from said business connection income arose or accrued to non-resident - He, accordingly, passed an order under section 163(1) treating assessee-company as agent of 'IE' - AAC affirmed ITO's findings - On appeal before Tribunal, assessee contended that 'IE' was a non resident broker and, therefore, under proviso to section 163(1) assessee could not be treated as agent of 'IE' - Tribunal rejected assessee's contention on ground that no evidence was adduced by assessee to show that 'IE' was a non resident broker - On instant reference, it was seen from terms of agreement that there was not only a business connection between assessee-company and 'IE' but also from such business connection business income had directly or indirectly accrued to said non-resident ('IE')) in India - Agreement further should that assessee-company was employed by said non-resident as its 'agent' within meaning of section 163(1) - Whether, in aforesaid circumstances, Tribunal was right in holding that 'IE', a non resident with which assessee had dealings, was not a non-resident broker and therefore assessee was liable to be treated as agent of said non-resident - Held, yes FACTS In terms of an agreement, 'IE' a non-resident appointed the assessee-company as its agent for certain Indian territories for mediating export transactions of its products manufactured abroad and to be sold in those territories. The ITO held that there was a business connection between the assessee-company and 'IE' and from the said business connection the income arose or accrued to the non-resident. He, accordingly, attributed that part of the business income which accrued in India and was reasonably attributable to the said operation carried out in India and passed an order under section 163(1)…

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