Notice u/s 139 (9) for itr 6

Hello Divyanshu,

Assuming your query to be relating to the FY 2016-17, ITR-6 is applicable only to Company Assesses(Other than those companies claiming exemption u/s 11). Its persumed from your query that your client is an Individual, which means the ITR form filed by you is incorrect. You should have filed ITR1 or 2 based on the nature and amount of royalty received.

By nature & amount:

1. if the royalty amount was in nature of capital receipt (like sale of patent, copyright, etc.) or the amount was exceeding Rs.50lakhs then it has to be filed in ITR-2

2. if the royalty amount was not of capital nature (or) if the amount does not exceed Rs.50lakhs then you can file in ITR-1 form. 

Putting all above aside, if your client was a company then its compulsory you to prepare and fill P&L and Balance sheet in ITR-6. Hope this solves your query.

 

Hey, Sorry didn't mention it. It's Foreign company which does not have any Permanent Establishment in India.

I tried adding details in Balance Sheet & P/L: 1st Issue: Since I want to take benefit of DTAA, I will have to show my royalty income under Income from other sources. Due to this, the profit as per Profit & Loss Account would not tally with Income shown under Computation of Income Sheet. 2nd Issue: If somehow I add details in B/s and P/L, the income will be chargeable to flat 40% rate instead of 10%. Hope you get clearity on the issues now.

Then you have to fill income under the head business or profession and claim relief u/s 90/90A based on TRC obtained and Tax return filed in the other country. For royalty income, if the same was not taxed elsewhere, the same can be filed under other source and taxed in India. But return cannot be filed without P&L and Balance Sheet. 

The P&L has to be filed along with the royalty income in the annexure and while computing tax the royalty amount has to be subratcted from the profit or loss figure under Business or profession (claiming to be reported under Other source) and report the same under Other source. Hope by this way you can get the benefit of DTAA @ 10% under Other Source.

The P&L has to be filed along with the royalty income in the annexure and while computing tax the royalty amount has to be subratcted from the profit or loss figure under Business or profession (claiming to be reported under Other source) and report the same under Other source. Hope by this way you can get the benefit of DTAA @ 10% under Other Source.