Where assessee, a US based company, entered into an agreement with another US company in terms of which it acquired patent and technical information related to manufacture of two products, in view of fact that assessee company got said products manufactured from its holding company in India which were subsequently sold in USA, it is a case where there is clear business connection with India. Thus, royalty paid by assessee to said US based company is taxable in India under S. 9(1)(vi) of the Act. (AY. 2009-10)
Dorf Ketal Chemicals LLC v. Dy. CIT (2018) 165 DTR 215 / 193 TTJ 390 (Mum) (Trib.)
S. 9(1)(vi) : Income deemed to accrue or arise in India – Royalty – Assessee, a US company, was wholly owned subsidiary of an Indian company entered into an agreement with another US company to acquire patent and technical information related to manufacturing of two products belonging to said foreign company – Assessee got said products manufactured from its holding company in India and same were subsequently sold in US – This shows clear business connection with India – royalty paid by assessee to US company in terms of patent agreement was taxable in India under S. 9(1)(vi) of the Act.