Export of goods from India by non-residents under Taxability of different kinds of income :

Clause (b) of the Explanation to section 9(1)(i) provides that in the case of every non-resident, no income should be regarded as being deemed to accrue or arise to him in India through or from operations which are confined to the purchase of goods in India for the purpose of export. Thus, even in cases where the non-resident has an agency or office in India but the agent or branch office in India does nothing more than the purchase of the goods for their export, there would be no question of income accruing to the non-resident under the deeming provisions although in effect the non-resident may derive income outside India from the goods so exported ultimately on their sale outside India and the profits arising from such export are traceable to the business connection in India through the agency, branch or office. The exemption is, however, subject to the non-resident taking precaution to ensure that even a negligible part of the goods purchased are not sold in India and the whole of the goods purchased are only exported. The country to which the export is made is immaterial for the purpose. Of course, care should be taken in every case to secure that no part of the sale proceeds for the goods exported is received directly or indirectly, in cash or in kind in India by or on behalf of the non-resident. In view of this benefit of total exemption from income-tax without any monetary or other limits and conditions, every possible export should be made by foreign collaborators and their Indian counterparts to secure that the benefit of exemption under clause (b) of the Explanation to section 9(1)(i) is obtained, wherever practicable.