Deduction under Section 80E/80-I of Income Tax Act, 1961. - Income Tax - 486/CBDT

INSTRUCTION NO. 486/CBDT December 14, 1972 Section(s) Referred: 80I Statute: Income - Tax Act, 1961 Reference is invited to the provisions of Section 80-I as it stands at present with its scheduled omission from 1.4.73 vide Finance Act, 1972; prior to the introduction of Section 80-I with effect from 1.4.68 by Finance (No.2) Act, 1967, the relevant provisions were contained in Section 80E. A question has arisen as to whether income received by an assessee company covered by aforesaid Section 80E/80-I for provision of technical know-how, in the manufacture of articles or things specified in the list of priority industries (V Schedule to the Income-tax Act), to a person who manufactures such articles or things, can be held to the income attributable to the priority industry for the purposes of deduction under Section 80E/80-I of the Income-tax Act, 1961. 2. The matter has been examined by the Board in consultation with the Ministry of Law. The Board are advised that if in the above noted circumstances the person from whom fees are received by an assessee company for the provision of technical know-how does not actually manufacture such articles comprised in the priority industries during a particular year (e.g. there is only pre-priority work done that year), such fees cannot be stated to be income attributable to the priority industry and hence provisions of Section 80E/80-I are not applicable to such income. 3. Necessary instructions may please be issued to the assessing officers to keep the above interpretation in view.