Scope of Sec.80-O. - Income Tax - 1812/1989

INSTRUCTION NO. 1812/1989 Dated: March 17, 1989 In a case relating to deduction under section 80-O of the Incometax Act, 1961, examined by the Audit, the agreement between the Indian Company and the foreign enterprises provided for rendering of technical services by the Indian company. In return for such services the foreign enterprise was to pay certain technical service charges as also over-head and establishment charges, which were separately specified in the agreement. The question whether payments made by the foreign enterprise to the Indian company towards over-head and establishment expenses incurred in India would partake the character of income qualifying for deduction under section 80-O of the Income-tax Act, was referred to the Attorney General of India for his opinion. The Attorney General has opined that such payment would not be entitled to deduction under section 80-O of the Incometax Act. 2. A copy of the *Referal Note dated 24.11.1987 as well as copy of the ** opinion dated 5.8.88 given by the learned Attorney General are enclosed for favour of information and necessary action. These may be brought to the notice of all officers working in your region.