Approval of agreements for the purpose of section 80MM of the Income-tax Act,1961--Guidelines regarding - Income Tax - 332/1982

Approval of agreements for the purpose of section 80MM of the Income-tax Act,1961--Guidelines regarding Circular No. 332 Dated 25/3/1982 Attention is invited to the Board's Circular No. 140 [F.No. 167/231/74-IT(AI)] dated 6th July, 1974*, para. 1 (xiii), wherein it was stated that in the case of a composite agreement which specified a consolidated amount as consideration for purposes which included matters outside the scope of section 80MM, the Board may not approve such an agreement for purposes of section 80MM of the Act if, in the opinion of the Board, it was not possible to properly as certain and determine the amount of the consideration relatable to the provision of technical know-how qualifying for section 80MM. Thus, the benefit of section 80MM could be denied to the entire amount of royalty, commission, fees, etc., receivable under such an agreement. The Board has had occasion to reconsider it. It has been decided that in such cases approval would be granted by the Board subject to a suitable disallowance for the non-qualifying items, after taking into consideration the totality of the agreement, so that the balance royalty, commission, fees, etc., which is for provision of technical know-how or services in connection with provision of such technical know-how covered by section 80MM, can be exempted. (Sd.) S.N.L. Agarwala OSD, CBDT. * See [1974] 95 ITR (St.) 144.