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Issues involved:
Interpretation of u/s 9(1)(i) of the Income Tax Act, 1961 regarding taxation of income for non-resident involved in purchasing goods in India for export. Summary: The case involved a non-resident engaged in the business of readymade garments in Japan, with operations in India through a commission agent for purchasing and exporting garments. The Income-tax Officer contended that income should be deemed to accrue in India from operations involving purchase and manufacture of goods in India. The assessee argued that the case fell under clause (b) of the Explanation to u/s 9(1)(i), exempting income from operations confined to purchasing goods in India for export. The Appellate Assistant Commissioner agreed with the assessee, noting the removal of a proviso limiting the exemption for non-residents with no office or agency in India. The Income-tax Appellate Tribunal upheld this decision, emphasizing that the assessee's activities were covered by clause (b) of the Explanation to u/s 9(1)(i), especially after the removal of the proviso. The Tribunal referred a question of law to the High Court regarding the applicability of clause (b) over clause (a) of the Explanation to u/s 9(1)(i). The High Court analyzed the legislative intent behind the removal of the proviso, emphasizing the encouragement of exports. It concluded that the assessee's case clearly fell under clause (b), entitling the non-resident to exemption from taxation on income arising from purchasing goods in India for export. Therefore, the High Court affirmed the Tribunal's decision, ruling in favor of the assessee and answering the question of law in the affirmative. No costs were awarded in the matter.
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