Section 55 - Amendment of section 115JB. - Finance Act, 2016

Amendment of section 115JB. 55. In section 115JB of the Income-tax Act,- (I) after sub-section (2),- (a) in Explanation 1, with effect from the 1st day of April, 2017,- (i) after clause (fc), the following clause shall be inserted, namely:- (fd) the amount or amounts of expenditure relatable to income by way of royalty in respect of patent chargeable to tax under section 115BBF; or ; (ii) in the long line,- (A) in clause (iif), for the words may be; occurring at the end, the words may be; or shall be substituted; (B) after clause (iif), the following clause shall be inserted, namely:- (iig) the amount of income by way of royalty in respect of patent chargeable to tax under section 115BBF; ; (b) Explanation 4 shall be renumbered as Explanation 5 thereof and before Explanation 5 as so renumbered, the following Explanation shall be inserted and shall be deemed to have been inserted with effect from the 1st day of April, 2001, namely:- Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section shall not be applicable and shall be deemed never to have been applicable to an assessee, being a foreign company, if- (i) the assessee is a resident of a country or a specified territory with which India has an agreement referred to in sub-section (1) of section 90 or the Central Government has adopted any agreement under sub-section (1) of section 90A and the assessee does not have a permanent establishment in India in accordance with the provisions of such agreement; or (ii) the assessee is a resident of a country with which India does not have an agreement of the nature referred to in clause (i) and the assessee is not required to seek registration under any law for the time being in force relating to companies. ; (II) after sub-section (6), the following sub-section shall be inserted with effect from the 1st day of April, 2017, namely:- (7) Notwithstanding anything contained in sub-section (1), where the assessee referred to therein, is a unit located in an International Financial Services Centre and derives its income solely in convertible foreign exchange, the provisions of sub-section (1) shall have the effect as if for the words eighteen and one-half per cent. wherever occurring in that sub-section, the words nine per cent. had been substituted. Explanation .-For the purposes of this sub-section,- (a) International Financial Services Centre shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005; (28 of 2005.) (b) unit means a unit established in an International Financial Services Centre; (c) convertible foreign exchange means a foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Management Act, 1999 (42 of 1999) and the rules made thereunder. .