Regarding admissibility of Sec 80MM benefits. - Income Tax - 1448/CBDT

INSTRUCTION NO. 1448/CBDT Dated: January 20, 1982 U/s.80 MM of the I.T. Act, income by an Indian company from any person carrying on business in India in consideration for the provision of technical know-how or rendering services in connection with the provision of such technical know-how under an agreement approved by the board in this behalf qualifies for 40 % deduction in computing the total income of the company. Before granting approval u/s.80 MM the board satisfies itself that the activities or services as mentioned in the agreement amount to provision of technical know-how or rendering or services in connection there with. However the boards approval of the agreement does not debar the ITO from examining whether the activities actually carried out or the services actually rendered are outside the scope of the agreement as approved by the board. At the time of making assessment and before allowing benefit of sec.80 MM the assessing officers should invariably satisfy themselves that the activities and the services actually performed are in accordance with the terms of agreement as approved by the board. This precaution is necessary on the part of the AOs so that the assessees may not obtain unintended benefit in respect of payments which do not come under the purview of sec.80 MM. 2. These instructions may be brought to the notice of all the officers working in your charge.