Section 80O - Deduction in respect of royalties, etc., from certain foreign enterprises - Income-tax Act, 1961

1 [Deduction in respect of royalties, etc., from certain foreign enterprises. 80-O. 2 [ Where the gross total income of an assessee, being an Indian company 3 [ or a person (other than a company) who is resident in India ]], includes 4 [ any income received by the assessee from the Government of a foreign State or foreign enterprise in consideration for the useoutside India of any patent, invention, design or registered trade mark ] 5 [ *** ] 6 [ and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee in accordance with any law for the time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section, 7 [ a deduction of an amount equal to- ( i ) forty per cent for an assessment year beginning on the 1st day of April, 2001; ( ii ) thirty per cent for an assessment year beginning on the 1st day of April, 2002; ( iii ) twenty per cent for an assessment year beginning on the 1st day of April, 2003; ( iv ) ten per cent for an assessment year beginning on the 1st day of April, 2004, of the income so received in, or brought into, India, in computing the total income of the assessee and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year ]] : 8 [ *** ] 9 [Provided 10 [ *** ] that such income is received in India within a period of six months from the end of the previous year, or 11 [ within such further period as the competent authority may allow in this behalf ]:] 12 [Provided further that no deduction under this section shall be allowed unless the assessee furnishes a certificate, in the prescribed form, along with the return of income, certifying that the deduction has been correctly claimed in accordance with the provisions of this section .] 13 [ Explanation . - For the purposes of this section,- ( i ) convertible foreign exchange means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the law for the time being in force for regulating payments and dealings in foreign exchange; 14 [ ( ii ) foreign enterprise means a person who is a non-resident ;]] 15 [ ( iii ) services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India ;] 16 [ ( iv ) competent authority means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange. ] (2) 17 [ *** ]] ----------------------------- Notes :- 1. Substituted by the Finance (No. 2) Act, 1971, w.e.f. 1-4-1972. This topic was originally dealt with by section 85C which was inserted by the Finance Act, 1966, w.e.f. 1-4-1966. Section 80-O was inserted, in place of section 85C which was deleted by the Finance (No. 2) Act, 1967, w.e.f. 1-4-1968. Section 80-O was later on amended by the Finance Act, 1968, w.e.f. 1-4-1969. 2. Substituted for (1) Where the gross total income of an assessee, being an Indian company or a person (other than a company) who is resident in India, by the Finance Act, 1974, w.e.f. 1-4-1975. 3. Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. 4. Substituted for the portion beginning with the words any income by way of royalty and ending with the words outside India to such Government or enterprise by the assessee, by the Finance Act, 1997, w.e.f. 1-4-1998. Earlier the quoted portion was amended by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. 5. Words under an agreement approved in this behalf by the Chief Commissioner or the Director General; omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Earlier these words were substituted for under an agreement approved by the Board in this behalf by the Finance Act, 1988, w.e.f. 1-4-1989. 6. Substituted for and such income is received in convertible foreign exchange in India, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction of an amount equal to fifty per cent of the income so received in India in computing the total income of the assessee (as it stood after the amendment made by the Finance Act, 1987) by the Finance Act, 1988, w.e.f. 1-4-1988. Earlier, this portion of the section was amended by the Finance Act, 1974, with retrospective effect from 1-4-1972 and later on by the Finance Act, 1984, w.e.f. 1-4-1985. 7. Substituted for the portion beginning with the words a deduction of an amount and ending with the words total income of the assessee by the Finance Act, 2000, w.e.f. 1-4-2001. Prior to its substitution, the quoted portion read as under : a deduction of an amount equal to fifty per cent of the income so received in, or brought into, India, in computing the total income of the assessee . 8. Omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. Prior to omission, the provisos as substituted by the Finance Act, 1988, w.e.f. 1-4-1989. 9. Inserted by the Finance Act, 1987, w.e.f. 1-4-1988. 10. Word also omitted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. 11. Substituted for the portion beginning with the words where the Chief Commissioner and ending with the words may allow in this behalf by the Finance Act, 1999, w.e.f. 1-6-1999. Prior to its substitution the said portion, as amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1-4-1988, read as under : where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf . 12. Inserted by the Finance Act, 1999, w.e.f. 1-6-1999. 13. Substituted by the Finance Act, 1985, w.e.f. 1-4-1986. Earlier the Explanation was inserted by the Finance Act, 1974, w.r.e.f. 1-4-1972. 14 . Substituted by the Finance Act, 1987, w.e.f. 1-4-1988. 15. Inserted by the Finance (No. 2) Act, 1991, w.e.f. 1-4-1992. 16. Inserted by the Finance Act, 1999, w.e.f. 1-6-1999. 17. Omitted by the Finance Act, 1974, w.e.f. 1-4-1975.