I am a foreign technician deputed to India by my overseas employer, who pays my Indian tax. The Indian factory slits, perforates and spools imported film. Am I a technician in manufacturing operations, and does it matter that my employer is foreign?
Yes on both. The Authority ruled that Mr Newell, a production operations manager employed by Kodak Limited in the United Kingdom and deputed to the Goa factory of Kodak India Limited, was a technician within the Explanation to s.10(5B) and entitled to the exemption. Slitting, perforating, notching and spooling imported jumbo rolls of film into 35mm cassettes and motion picture film was held to be manufacture, because what emerged was a different commercial commodity even though the original article remained identifiable. On the second point, the Authority read s.10(5B) as placing no restriction on who the employer is: a technician employed in a business in India qualifies whether the employer is Indian or foreign. The ruling binds only Mr Newell.
Pronounced by the Authority for Advance Rulings (S. Ranganathan, Chairman and R. L. Meena, Member) on 1996-08-20, reported as [1997] 223 ITR 776 (AAR). It bears on section 10(5B), section 10(6)(vi), section 245Q of the Income Tax Act 1961, in Capital Gains Exemptions, Salary & Perquisites and How Tax Law Is Read matters.
The exemption this was decided under has since been withdrawn, so reach for the ruling for the two propositions that outlived it. The first is the test of manufacture. The Authority refused to make loss of identity the criterion and held that a manufacturing process exists so long as the resultant article has a separate commercial identity, listing on either side of the line the cases on spectacle assembly, oil blending, tea blending and ore blending against retreading, dyeing and printing, mica cutting and limestone crushing. That is the passage later benches use, and it travels to every provision that turns on the word manufacture. The second is a reading habit: where an exemption describes the employment rather than the employer, the department cannot read in a requirement that the employer be Indian, and cannot relegate an employee of a foreign enterprise to a narrower clause simply because a narrower clause exists. The department's counter was the collocation argument - that the surrounding words in the clause point to Indian employers - and the Authority answered it by pointing out that the reading produced a worse result for the revenue in some cases and an arbitrary one in others.
Binding only on the applicant who sought it, in respect of the transaction the ruling was sought on, and on the Principal Commissioner or Commissioner and the authorities subordinate to him in respect of that applicant and that transaction — and only until the law or the facts change (section 245S). It binds nobody else. The Tribunal and the courts nonetheless treat a considered ruling as persuasive, which is why practitioners cite them.
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Mr Arthur E. Newell, a resident of the United Kingdom, was an employee of Kodak Limited, a UK company. On 26 January 1995 the company gave him an assignment in Goa. He arrived in India for the first time on 5 February 1995, left after seven days, returned on 4 March 1995 and stayed for the twelve months of the assignment, so his stay in financial year 1994-95 was 35 days and he was a non-resident for that year. He had not been resident in India in any of the four financial years preceding his arrival, and the UK company paid the Indian income-tax on the remuneration for his services in India. Kodak India Limited, a 51 per cent joint venture, ran a factory at Goa that imported emulsion-coated cellulose triacetate base in jumbo rolls 54 inches wide and about 5,000 ft long, stored them at 12 degrees C and 50 per cent relative humidity, stabilised them at 22 degrees C, slit them to 35mm, perforated the edges to international standards, applied sigma printing and notching including bar codes, and spooled, capped and packed the result as camera film and Eastman colour print motion picture film, all in complete darkness. Mr Newell had worked as production operations manager with the UK company for over seventeen years. He asked the Authority whether the exemption under s.10(5B) was available to him and whether he would be considered a technician for that clause.
Both questions were answered Yes. The operations at the Goa factory were manufacturing operations, and the applicant's specialised knowledge and experience were utilised in them, so he was a technician within the Explanation to s.10(5B). The Authority rejected the suggestion that the clause is confined to employees of Indian employers: s.10(5B) speaks of a technician employed in a business in India and places no restriction on the status of the employer, the only conditions being the residential test and payment of the tax on the employee's remuneration by the employer, both of which were met. It also rejected the argument that an employee of a foreign enterprise must be relegated to s.10(6)(vi), holding that the two clauses are independent, cater to different sets of people, and that where a person is eligible under two provisions he may claim under whichever is more beneficial.
On manufacture the Authority put the objection at its highest against the applicant first: the company imports film and produces film, differing only in size, shape and packaging, with no improvement in sensitivity or quality. It answered by locating the test in commercial identity rather than in destruction of the input. The essence of manufacture is a change or modification of material into an acceptable form to satisfy a want, and whether an article has been converted into a different article depends on whether, in a commercial sense, the original has ceased to exist and a new one has taken its place - which does not require the original to have lost its identity completely. It then set the decided cases on both sides of that line and observed that the concept of total change is unhelpful for a commodity like film, where any change in structure destroys the basic quality and the whole point of the processes is to preserve it. Commercially the jumbo rolls and the two kinds of film sold to the public are not the same article with a difference in shape. On the employer point the Authority took the two clauses in turn. Reading s.10(5B) as confined to Indian employers would mean a technician doing identical work in an Indian business loses the exemption because his foreign employer, rather than an Indian one, is willing to meet the Indian tax - which is the situation more favourable to the exchequer. Applying the rule that a special provision overrides a general one, clause (5B) deals with technicians as a class and clause (6)(vi) with employees of foreign enterprises generally; on the alternative view both are special provisions whose overlap is small, and where an assessee is eligible under two provisions he may take the more beneficial.
There can be a manufacturing process, so long as the resultant article has a different and separate commercial identity, notwithstanding that the original article is still identifiable and existent.
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Handle my notice → Ask a CA on WhatsAppYes on both. The Authority ruled that Mr Newell, a production operations manager employed by Kodak Limited in the United Kingdom and deputed to the Goa factory of Kodak India Limited, was a technician within the Explanation to s.10(5B) and entitled to the exemption. Slitting, perforating, notching and spooling imported jumbo rolls of film into 35mm cassettes and motion picture film was held to be manufacture, because what emerged was a different commercial commodity even though the original article remained identifiable. On the second point, the Authority read s.10(5B) as placing no restriction on who the employer is: a technician employed in a business in India qualifies whether the employer is Indian or foreign. The ruling binds only Mr Newell. This was decided by the Advance Ruling (S. Ranganathan, Chairman and R. L. Meena, Member) and bears on section 10(5B), section 10(6)(vi), section 245Q of the Income Tax Act 1961. It is reported as [1997] 223 ITR 776 (AAR). The exemption this was decided under has since been withdrawn, so reach for the ruling for the two propositions that outlived it. The first is the test of manufacture. The Authority refused to make loss of identity the criterion and held that a manufacturing process exists so long as the resultant article has a separate commercial identity, listing on either side of the line the cases on spectacle assembly, oil blending, tea blending and ore blending against retreading, dyeing and printing, mica cutting and limestone crushing. That is the passage later benches use, and it travels to every provision that turns on the word manufacture. The second is a reading habit: where an exemption describes the employment rather than the employer, the department cannot read in a requirement that the employer be Indian, and cannot relegate an employee of a foreign enterprise to a narrower clause simply because a narrower clause exists. The department's counter was the collocation argument - that the surrounding words in the clause point to Indian employers - and the Authority answered it by pointing out that the reading produced a worse result for the revenue in some cases and an arbitrary one in others. If it applies to you, the first step is this: When arguing manufacture, ask whether the end product has its own commercial name, identity, character or end use - not whether the input has been destroyed.
Mr Arthur E. Newell, a resident of the United Kingdom, was an employee of Kodak Limited, a UK company. On 26 January 1995 the company gave him an assignment in Goa. He arrived in India for the first time on 5 February 1995, left after seven days, returned on 4 March 1995 and stayed for the twelve months of the assignment, so his stay in financial year 1994-95 was 35 days and he was a non-resident for that year. He had not been resident in India in any of the four financial years preceding his arrival, and the UK company paid the Indian income-tax on the remuneration for his services in India. Kodak India Limited, a 51 per cent joint venture, ran a factory at Goa that imported emulsion-coated cellulose triacetate base in jumbo rolls 54 inches wide and about 5,000 ft long, stored them at 12 degrees C and 50 per cent relative humidity, stabilised them at 22 degrees C, slit them to 35mm, perforated the edges to international standards, applied sigma printing and notching including bar codes, and spooled, capped and packed the result as camera film and Eastman colour print motion picture film, all in complete darkness. Mr Newell had worked as production operations manager with the UK company for over seventeen years. He asked the Authority whether the exemption under s.10(5B) was available to him and whether he would be considered a technician for that clause. The matter was decided on 1996-08-20 by the Advance Ruling (S. Ranganathan, Chairman and R. L. Meena, Member). On those facts the Advance Ruling held as follows. Both questions were answered Yes. The operations at the Goa factory were manufacturing operations, and the applicant's specialised knowledge and experience were utilised in them, so he was a technician within the Explanation to s.10(5B). The Authority rejected the suggestion that the clause is confined to employees of Indian employers: s.10(5B) speaks of a technician employed in a business in India and places no restriction on the status of the employer, the only conditions being the residential test and payment of the tax on the employee's remuneration by the employer, both of which were met. It also rejected the argument that an employee of a foreign enterprise must be relegated to s.10(6)(vi), holding that the two clauses are independent, cater to different sets of people, and that where a person is eligible under two provisions he may claim under whichever is more beneficial.
On manufacture the Authority put the objection at its highest against the applicant first: the company imports film and produces film, differing only in size, shape and packaging, with no improvement in sensitivity or quality. It answered by locating the test in commercial identity rather than in destruction of the input. The essence of manufacture is a change or modification of material into an acceptable form to satisfy a want, and whether an article has been converted into a different article depends on whether, in a commercial sense, the original has ceased to exist and a new one has taken its place - which does not require the original to have lost its identity completely. It then set the decided cases on both sides of that line and observed that the concept of total change is unhelpful for a commodity like film, where any change in structure destroys the basic quality and the whole point of the processes is to preserve it. Commercially the jumbo rolls and the two kinds of film sold to the public are not the same article with a difference in shape. On the employer point the Authority took the two clauses in turn. Reading s.10(5B) as confined to Indian employers would mean a technician doing identical work in an Indian business loses the exemption because his foreign employer, rather than an Indian one, is willing to meet the Indian tax - which is the situation more favourable to the exchequer. Applying the rule that a special provision overrides a general one, clause (5B) deals with technicians as a class and clause (6)(vi) with employees of foreign enterprises generally; on the alternative view both are special provisions whose overlap is small, and where an assessee is eligible under two provisions he may take the more beneficial. In the words reproduced by the source cited on this page: "There can be a manufacturing process, so long as the resultant article has a different and separate commercial identity, notwithstanding that the original article is still identifiable and existent."
It was decided by the Advance Ruling on 1996-08-20 and is reported as [1997] 223 ITR 776 (AAR). Binding only on the applicant who sought it, in respect of the transaction the ruling was sought on, and on the Principal Commissioner or Commissioner and the authorities subordinate to him in respect of that applicant and that transaction — and only until the law or the facts change (section 245S). It binds nobody else. The Tribunal and the courts nonetheless treat a considered ruling as persuasive, which is why practitioners cite them. An advance ruling binds only the applicant who sought it, only for the transaction it was sought on, and only the Commissioner and the officers under him in relation to that applicant and that transaction — and only until the law or the facts change. That is section 245S, and it means the ruling is not a precedent and binds nothing in your case. You cite it because the Authority reasoned the point out, often first and most fully, and the Tribunal and the courts treat a considered ruling as persuasive. Check before you rely on one: most of these were pronounced before 2009, and a great deal of cross-border tax has been rewritten since by amendment, protocol and judgment. On section 10(5B), section 10(6)(vi), section 245Q, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It helps the taxpayer. Both questions were answered Yes. The operations at the Goa factory were manufacturing operations, and the applicant's specialised knowledge and experience were utilised in them, so he was a technician within the Explanation to s.10(5B). The Authority rejected the suggestion that the clause is confined to employees of Indian employers: s.10(5B) speaks of a technician employed in a business in India and places no restriction on the status of the employer, the only conditions being the residential test and payment of the tax on the employee's remuneration by the employer, both of which were met. It also rejected the argument that an employee of a foreign enterprise must be relegated to s.10(6)(vi), holding that the two clauses are independent, cater to different sets of people, and that where a person is eligible under two provisions he may claim under whichever is more beneficial. It arises in Capital Gains Exemptions, Salary & Perquisites and How Tax Law Is Read matters, on section 10(5B), section 10(6)(vi), section 245Q of the Income Tax Act 1961, and was decided by S. Ranganathan, Chairman and R. L. Meena, Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Set out the process step by step with the tolerances and standards it must meet; the Authority's conclusion here rested on the detail of the operations, not on a label. Where an exemption describes the employment and not the employer, resist any attempt to read a nationality or residence condition into it. Do not build a current claim on s.10(5B): it was omitted by the Finance Act 2002 with effect from 1 April 2003. Use the ruling for the manufacture reasoning instead. Treat the ruling as persuasive only - it binds the applicant and his own assessment, nobody else.
Superseded by amendment. The provision the ruling turns on no longer exists. The current text of s.10 on the departmental site carries clause (5B) struck through with the annotation 'Omitted by the Finance Act, 2002, w.e.f. 1-4-2003', so the exemption for tax paid by an employer on a foreign technician's salary is gone and nothing in this ruling can support a claim under it today. What survives is the reasoning on manufacture and on reading employment-based exemptions, and that reasoning has been picked up elsewhere: a search of Indian Kanoon returns the ruling named in the Madras High Court decision in CIT v Tamil Nadu Heat Treatment and Fetting (24 February 1998), in the Authority's own later ruling in Vance Robert Heffern (20 August 1999), and in ITAT decisions including Soni Photo Films (Delhi, 1998) and Auto Ignition Ltd (Delhi, 2017). I read only the search listing for those and did not open them, so whether each approved, applied or merely mentioned the ruling is not established here. I did not check whether the Income-tax Act 2025 carries any successor exemption for foreign technicians. The Authority itself was replaced by the Board for Advance Rulings from 1 September 2021 (Notification 96/2021), whose rulings are appealable to the High Court under s.245W, and the Income-tax Act 1961 has been replaced by the Income-tax Act 2025 from 1 April 2026, so the section numbers in this entry are those of the 1961 Act. That finding was checked against a published source, which is linked on this page, on 2026-08-23. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
No second source was found for this ruling; the entry rests on the full text of the ruling itself. An advance ruling binds only the applicant who sought it, only for the transaction it was sought on, and the Commissioner and the income-tax authorities subordinate to him in relation to that applicant and that transaction - and only for so long as the law and the facts stay as they were. It binds nobody else, though a considered ruling of this kind is treated as persuasive. The ruling does not decide the period for which the exemption runs on these facts beyond repeating the statutory 48 months from the date of arrival, and it does not quantify anything. The Authority accepted the applicant's plea on construction operations only in a limited way - it recorded that the factory building was complete and trial production had started by May 1995, so the construction limb was not made out, and rested the ruling on manufacturing operations. Its observations on s.10(6)(vi) are reasoning, not a ruling: no question on that clause was posed and none was answered. A taxworry.com page quotes the ruling's language on constructional or manufacturing operations and gives the citation, but does not state the outcome, so it was not used as corroboration. The Authority itself was replaced by the Board for Advance Rulings from 1 September 2021 (Notification 96/2021), whose rulings are appealable to the High Court under s.245W, and the Income-tax Act 1961 has been replaced by the Income-tax Act 2025 from 1 April 2026, so the section numbers in this entry are those of the 1961 Act. The entry does not say what, if anything, replaced s.10(5B) for foreign technicians, nor how the Income-tax Act 2025 treats a deputed employee whose overseas employer bears the Indian tax. It does not establish how the later High Court and Tribunal decisions that name the ruling treated it. The reported citation is taken from the equivalent-citations line of the Indian Kanoon text and was not checked against the ITR volume, and no second host was found that states the outcome. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
Both questions were answered Yes. The operations at the Goa factory were manufacturing operations, and the applicant's specialised knowledge and experience were utilised in them, so he was a technician within the Explanation to s.10(5B). The Authority rejected the suggestion that the clause is confined to employees of Indian employers: s.10(5B) speaks of a technician employed in a business in India and places no restriction on the status of the employer, the only conditions being the residential test and payment of the tax on the employee's remuneration by the employer, both of which were met. It also rejected the argument that an employee of a foreign enterprise must be relegated to s.10(6)(vi), holding that the two clauses are independent, cater to different sets of people, and that where a person is eligible under two provisions he may claim under whichever is more beneficial.
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