Section Text
In section 40 of the Income-tax Act, in clause (a), for sub-clause(i) the following shall be substituted, namely:--
(i) any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technicalservices or other sum chargeableunder this Act, which is payable,--
(A) outside India; or
(B) in India to a non-resident, notbeing a company or to a foreign company, on which tax is deductible at sourceunder Chapter XVII-B and suchtax has not been deducted or, after deduction, has not been paid during theprevious year, or in the subsequentyear before the expiry of the time prescribed under sub-section (1) of section 200:
Provided that where in respect ofany such sum, tax has been deducted in anysubsequent year or, has been deducted in the previous year but paid inany subsequent year after theexpiry of the time prescribed under sub-section(1 of section 200, such sum shall be allowed as a deduction in computing the income of theprevious year in which such tax has been paid.
Explanation:--For the purposes of this sub-clause,--
(A) "royalty"shall have the same meaningas in Explanation 2to clause (vi) of sub-section (1) of section 9;
(B) "fees for technicalservices" shall have thesame meaning as in Explanation 2to clause (vii) of sub-section (1) of section 9;
(ia) any interest, commission or brokerage, fees forprofessional services or fees for technical services payable to a resident, oramounts payable to a contractor or subcontractor,being resident, for carrying out any work (including supply of labour forcarrying out any work), on which tax is deductible at source under ChapterXVII_B and such tax has not beendeducted or, after deduction, has not been paid during the previous year, or inthe subsequent year before theexpiry of the time prescribed under sub-section(1) of section 200;
Provided that where in respect of any such sum, tax has been deductedin any subsequent year or, has been deducted in theprevious year but paid in anysubsequent year after the expiryof the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previousyear in which such tax has been paid.
Explanation.--for the purposes of this sub-clause,--
(i) "commission or brokerage" shall have the same meaning as in clause (i) ofthe Explanation to section 194H;
(ii) "fees for technical services" shall have the same meaning as in Explanation 2toclause (vii) of sub-section (1) ofsection 9;
(iii) "professional services" shall have the same meaning as in clause (a) ofthe Explanation to section 194J;
(iv) "work" shall have the same meaning as in Explanation IIIto section 194C;
(ib) any sum paid on account of securities transaction tax under Chapter VIIof the Finance (No. 2) Act, 2004;'.