In respect of a non-resident, what are the key parameters for determining the existence of "Business Connection" in India ?

The term business connection has not been defined in the Income Tax Act, 1961. However, an inclusive definition is available in Explanation 2 of section 9(1)(i), with respect to business connection arising on account of an agent of a non-resident. However, based on various judicial pronouncements and practice and well established principles, the following are considered as the pre-requisites to conclude that a non-resident has a business connection in India. There must be a business activity outside India There must be a business activity within India. The relation between the two should contribute to the earning of income by the non-resident. There must be an element of continuity between the business of the non-resident, carried out outside India and inside India. A stray and isolated transaction cannot be regarded as business connection.