Provisions u/s 80RR ,280O , Income - Tax Act, 1961. - Income Tax - 950/CBDT

INSTRUCTION NO. 950/CBDT Dated : April 24, 1976 Section(s) Referred: 80RR ,280O Statute: Income - Tax Act, 1961 Section 80RR of the Income tax Act, 1961, provides inter alia that where the gross total income of an individual resident in India, being an author, playwright, musician or actor, includes any income derived by him in exercise of his profession from certain foreign sources and such income is received in or brought into India in accordance with the Foreign Exchange Regulation Act, a deduction will be allowed in the computation of his total income of an amount equal to twenty-five per cent of such income, so received or brought into India. 2. A question has been raised whether deduction under section 80RR is admissible with reference to the net income or the gross receipts earned by an individual in foreign exchange from the foreign sources. 3. The matter has since been examined by the Board. The expression "gross total income" has been defined in section 80B(5) of the Income-tax Act, 1961 to mean the total income computed in accordance with the provisions of the Income-tax Act before making any deduction under Chapter VI-A or under section 280-O of the Act. Since gross total income is arrived at after allowing all the expenses incurred for earning income, it is the Net income as so arrived at, which is the gross total income for the purposes of Section 80RR of the Act. Therefore, the deduction under section 80RR is to be allowed with reference to the net income and not the gross receipts of individual concerned. In this connection, attention is also invited to the clarification given in paragraph 2 (viii) of Instruction No.797 (F.No.473/5/72-FTD), dated 23rd November, 1974 where the position in respect of deduction under section 80-O of the Act had been explained.