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SEC 44DA

Sandeep Pandey (CA FINAL) (1306 Points)

22 October 2009

What is SEC 44 DA? And how to treat it ?

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2 Replies

Deeps (Article Assisstant) (2485 Points)
Replied 22 October 2009

SPECIAL PROVISIONS FOR COMPUTING INCOME BY WAY OF ROYALTIES ETC. IN
CASE OF NON-RESIDENTS [SECTION 44DA]
The provisions of this section are as follows -
(i) The income by way of royalty or fees for technical services received from Government or
an Indian concern in pursuance of an agreement made by a non-corporate non-resident or a
foreign company with Government or the Indian concern after the 31st March, 2003 in respect
of such non-corporate non-resident or a foreign company which carries on business in India,
shall be computed on the basis of books of accounts required to be maintained under the Act.
(ii) Such business should be carried on through a permanent establishment, or the assessee
should perform professional services from a fixed place of profession in India
(iii) They should keep and maintain books of account and other documents in accordance
with the provisions contained in section 44AA.
(iv) They should get their accounts audited by an accountant as defined in the Explanation
below sub-section (2) of section 288 and furnish along with the return of income, the report of
such audit in the prescribed form duly signed and verified by such accountant.
(v) No deduction will be allowed while computing income of such non-resident, of the
expenditure which is not wholly and exclusively incurred for the business of such permanent
establishment or fixed place and also of any amount paid by the permanent establishment to
its head office or any of its offices.

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Amit Ingale (Student CA Final) (1454 Points)
Replied 22 October 2009

Special provision for computing income by way of royalties, etc., in case of non-residents.

44DA. (1) The income by way of royalty or fees for technical services received from Government or an Indian concern in pursuance of an agreement made by a non-resident (not being a company) or a foreign company with Government or the Indian concern after the 31st day of March, 2003, where such non-resident (not being a company) or a foreign company carries on business in India through a permanent establishment situated therein, or performs professional services from a fixed place of profession situated therein, and the right, property or contract in respect of which the royalties or fees for technical services are paid is effectively connected with such permanent establishment or fixed place of profession, as the case may be, shall be computed under the head “Profits and gains of business or profession” in accordance with the provisions of this Act :

Provided that no deduction shall be allowed,—

(i) in respect of any expenditure or allowance which is not wholly and exclusively incurred for the business of such permanent establishment or fixed place of profession in India; or

(ii) in respect of amounts, if any, paid (otherwise than towards reimbursement of actual expenses) by the permanent establishment to its head office or to any of its other offices.

(2) Every non-resident (not being a company) or a foreign company shall keep and maintain books of account and other documents in accordance with the provisions contained in section 44AA and get his accounts audited by an accountant as defined in the Explanation below sub-section (2) of section 288 and furnish along with the return of income, the report of such audit in the prescribed form²³ duly signed and verified by such accountant.

Explanation.—For the purposes of this section,—

(a) “fees for technical services” shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

(b) “royalty” shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;