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The Kerala High Court in [2021] 17 ITR-OL 69 (Ker) read into the expanded scope of section 5(2) to the case of a non-resident who derived commission for facilitating the marketing of the products of the resident company and generated business from different foreign territories. The High Court held that the income generated by the resident company by reason of the sales canvassed by the non-resident agent, in the territories of the European Union, North America and the Middle East was income sourced from those countries and that the services rendered for effecting exports by the assessee to foreign buyers, made the foreign countries the source of income. This agency contract according to the Court clearly fell under the second exception as provided under clause (b) of section 9(1)(vii) for the reasons that there was no utilization of the services rendered by the non-resident agent within India. The projects executed by the resident company even within India were for sale to the foreign buyer and it could not be said that merely for reason of the execution in India the service was utilized in India.

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