As a general proposition of law, income can be taxed in a country if the same is earned there. When a country legislates to operate beyond its territories it would offend the rules of international law.
Section 9 of the Income Tax Act, which deals with incomes, like interest, royalty, and fees for technical services, seeks to charge tax from a foreign enterprise on the basis that the payment of the said income was made by an Indian resident.
Thus a foreign enterprise becomes liable to pay tax in India on certain types of amounts received by it from Indian resident even where the income arises under a contract made and performed outside India, or even where neither the income nor the contract has any connection with India.
There appears to be no justification to levy income-tax on a foreigner in respect of income which has nothing to do with India.
