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2003 (2) TMI 35 - HC - Income TaxNon- resident - "1. Whether the assessee has income accruing and arising in India which is chargeable under section 5(2) of the Income-tax Act? - 2. If section 5(2) is not applicable then is there any business connection and the income accrued could be deemed to be under section 9(1)(i) of the Income-tax Act? - 3. Even if section 9(1)(i) of the Income-tax Act is not applicable, whether the provision of section 9(1)(vii) of the Income-tax Act are applicable?" - we are of the considered opinion that no income accrued under section 5(2) or there was any business connection, which is required under section 9(1)(i), as there was no dealing between the non-resident and resident on principal-to-principal basis, as such, there was no business connection involved. - The expenses met cannot be viewed in isolation from the main contract and once this is so, whether the payments were made on daily basis or not for any technical services rendered they would form part and parcel of consideration for the purchase of machinery. Thus, the provisions of section 9(1)(vii) of the Income-tax Act would not be applicable to the facts of this case. On the other hand, such payments are exempted under Explanation 2 to section 9(1)(vii)
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