The income of a non-resident person by way of royalty received from a resident person or a permanent establishment in Pakistan of a non-resident person shall be-
(a) in the case a royalty received in pursuance of an agreement made before the 8th day of March, 1980, or an agreement made on or after the said date the proposal in respect of which was approved by the Government before the said date, the gross amount of the royalty less the deductions allowed under section 40;or
(b) in any other case, to which sub-section (2) of section 6 does not apply, the gross amount of the royalty less[than] the following expenditure-
(i) any expenditure incurred In Pakistan to earn such royalty, wherever paid;
(ii) any expenditure incurred outside Pakistan in pursuance of such agreement not exceeding ten percent of gross amount of royalty.
(c) in the case of royalty received in pursuance to any other agreement, the gross amount of the royalty less the following expenditures only, namely:-
(i) any expenditure incurred in Pakistan in earning such income;
(ii) any expenditure incurred in Pakistan in respect of any work done in pursuance of such agreement; and
(iii) any expenditure incurred outside Pakistan in respect of any work done in pursuance of such agreement not exceeding ten percent of the gross amount of such royalty.
(d) The provisions of clauses (b) and (c) would not apply where, royalty is covered by section169.
