(1) The income referred to in sub-sections (2) to (8) shall be deemed to accrue or arise in India. (2) The income accruing or arising, directly or indirectly, through or from–– (a) any asset or source of income in India; or (b) any property in India; or (c) any business connection in India; or (d) the transfer of a capital asset situated in India, shall be deemed to accrue or arise in India.
(3) Any income falling under the head “Salaries” shall be deemed to accrue or arise in India, if it is— (a) earned in India, and any income payable for,— (i) services rendered in India; and (ii) the rest period or leave period which is preceded and succeeded by services rendered in India and forms part of the service contract of employment, shall be regarded as income earned in India; (b) payable by the Government to an Indian citizen for services rendered outside India. (4) Any dividend paid by an Indian company outside India shall be deemed to accrue or arise in India. (5)(a) Income by way of interest payable by–– (i) the Government; (ii) a resident, except where it is payable in respect of any debt incurred, or moneys borrowed and used, for the purpose of— (A) a business or profession carried on by such resident outside India; or (B) making or earning any income by such resident from any source outside India; or (iii) a non-resident, if it is in respect of any debt incurred, or moneys borrowed and used, for the purposes of a business or profession carried on by such non-resident in India, shall be deemed to accrue or arise in India; (b) for the purposes of clause (a),–– (i) any interest payable by the permanent establishment in India of a non-resident person engaged in the business of banking, to the head office or any other permanent establishment or any other part of such non-resident outside India shall be deemed to accrue or arise in India and shall be chargeable to tax in addition to any income attributable to such permanent establishment in India; (ii) such permanent establishment in India shall–– (A) be deemed to be a person separate from, and independent of, the non-resident person of which it is a permanent establishment; and (B) the provisions of this Act relating to computation of total income, determination of tax and collection and recovery shall apply, accordingly; (iii) “permanent establishment” shall have the meaning assigned to it in section 173(c).
(6)(a) Income by way of royalty payable by–– (i) the Government; (ii) a resident, except where the royalty is payable in respect of any right, property or information used or services utilised for the purposes of— (A) a business or profession carried on by such resident outside India; or (B) making or earning any income by such resident from any source outside India; or (iii) a non-resident, if the royalty is payable in respect of any right, property or information used or services utilised for the purposes of— (A) a business or profession carried on by such non-resident in India; or (B) making or earning any income by such non-resident from any source in India, shall be deemed to accrue or arise in India; (b) in this sub-section, “royalty” means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head “Capital gains”) for the following–– (i) the transfer or grant of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill; (v) the use or right to use any industrial, commercial or scientific equipment except the amounts referred in section 61(2) (Table: Sl. No. 5); (vi) the transfer or grant of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including–– (A) films or video tapes for use in connection with television; or (B) tapes for use in connection with radio broadcasting; (vii) the rendering of services in connection with the activities referred