Amendment of section 40.

11. In section 40 of the Income-tax Act, in clause (a), for sub-clause (i), the following shall be substituted, namely :ó

ë(i)Ý any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938), royalty, fees for technical services or other sum chargeable under this Act, which is payable,ó

(A)Ý outside India; or

(B)Ý in India to a non-resident, not being a company or to a foreign company,

ÝÝÝÝÝÝÝÝÝÝÝÝÝ on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time prescribed under sub-section (1) of secñtion 200 :

Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deductñed in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.

Explanation.óFor the purposes of this sub-clause,ó

(A)Ý ìroyaltyî shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9;

(B)Ý ìfees for technical servicesî shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

(ia)Ý any interest, commission or brokerage, fees for profesñsional services or fees for technical services payable to a resident, or amounts payable to a contractor or sub-contractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid during the previous year, or in the subsequent year before the expiry of the time preñscribed under sub-section (1) of section 200 :

Provided that where in respect of any such sum, tax has been deducted in any subsequent year or, has been deductñed in the previous year but paid in any subsequent year after the expiry of the time prescribed under sub-section (1) of section 200, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.

Explanation.óFor the purposes of this sub-clause,ó

(i)Ý ìcommission or brokerageî shall have the same meaning as in clause (i) of the Explanation to section 194H;

(ii)Ý ìfees for technical servicesî shall have the same meaning as in Explanation 2 to clause (vii) of sub-section (1) of section 9;

(iii)Ý ìprofessional servicesî shall have the same meanñing as in clause (a) of the Explanation to section 194J;

(iv)Ý ìworkî shall have the same meaning as in Explanation III to section 194C;

(ib)Ý any sum paid on account of securities transaction tax under Chapter VII of the Finance (No. 2) Act, 2004;í.