The Supreme Court in Sedco Forex International Drill Inc v. CIT, (2005) 279 ITR 310 (SC) while interpreting on the retrospective application of the Explanation, had held that the Explanation in section 9(1)(vi) of the Income-tax Act, 1961, as introduced by the Finance Act, 1999 ((1999) 237 ITR (St) 49) that the mere fact that the assessments remained pending could not be a cogent reason to make an Explanation retrospectively applicable, as it would be a fortuitous circumstance, which cannot take away the vested rights of the assessees and that there was a consistent judicial opinion that Explanation as inserted in a provision was not declaratory, but widened the scope of the original provision and as such, the Explanation could not be relied on for any purpose for an anterior period. Appeal of revenue was dismissed. (AY. 2003-04, 2004-05, 2007-08)
CIT v. Reliance Industries Ltd 2024] 165 taxmann.com 653 / (2025) 476 ITR 769 (Bom)(HC)
S. 9(1)(vi) : Income deemed to accrue or arise in India-Royalty-
Deduction of tax at source-Transactions entered into pertaining to assessment years prior to introduction of Explanation in section 9(1)(vi)-Explanation 4 introduced in section 9(1)(iv) by Finance Act, 20121 cannot have retrospective effect and payment not royalty liable to deduction of tax-Appeal of revenue was dismissed. [S. 9(1)(vi), Expln. 4, 37, 40(a)(ia), 195(2).