Explain with brief reasons as per provisions contained under the Income-tax Act, 1961, whether the interest of ₹5,00,000 paid to Mr. John, a non-resident (resident of UK) in the month of February, 2019 by Mr. Smith, a no

Taxability of Interest Income in Non-Resident's hands: As per section 9(1)(v)(c) of the Income Tax Act, 1961, interest payable by a non-resident on moneys borrowed and used for the purposes of business carried on by such person in India shall be deemed to accrue or arise in India in the hands of the recipient. Therefore, the interest of ₹5,00,000 paid to Mr. John a non-resident shall be deemed to accrue or arise in India and be subject to tax in the hands of Mr. John for the assessment year 2019-20.