9911796707
TMI BlogApproval of agreement under which assessee-company receives royalty, etc., from Government of foreign State or foreign enterprise, which is eligible for deduction under the section - Guidelines thereforX X X X Extracts X X X X X X X X Extracts X X X X ..... a. It has now been decided that approvals under section 80-O would not be denied on this ground. In other words, para 3(iii) of the circular, dated 23-12-1975 may be treated as deleted. 2. In para 3(ix) of the said circular, it was mentioned that consideration for use of trademark would be outside the scope of section 80-O. It has now been decided that payments made for the use of trade marks are of the nature of royalty, and, therefore, fall within the scope of section 80-O. 3. It was also stated in para 3(ix) of the said circular 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 80-O, the Board may not approve such an agreement for the purposes of section 80-O if it was not possible to properly ascertain and determine the amount of the consideration relatable to the provision of the know-how or technical services, etc., qualifying for section 80-O. Thus, the benefit of section 80-O could be denied to the entire amount of royalty, commission, fees, etc., receivable under such an agreement. It has since been decided that in such cases approval would be granted by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n not merely of a statistical type collected or collated from commercial or scientific journals or other commonly available sources of information, but it should be information, concerning the industrial, commercial or scientific knowledge, experience or skill possessed or developed by the Indian party and which is made available or provided to the foreign party under the agreement. Information regarding trade enquiries or reports regarding the credit or trade worthiness in individual cases will not qualify for this purpose. (v) The technical services rendered or agreed to be rendered to the foreign party should relate to productive fields such as (a) mining, or (b) generation or distribution of electricity or any other form of power, or (c) constructional, industrial or manufacturing operations, or (d) engineering services. Services such as those relating to management, organisation, sales, finance and accounts, will not qualify for this purpose. Technical services which are rendered or to be rendered in India will also not qualify for this purpose. (vi) Agreements for recruitment or mere supply of technical personnel from India for service outside India will not be eligible f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 80-O is subject to fulfilling the other conditions laid down in the section in this behalf. The actual amount eligible for deduction will be determined by the Income-tax Officer at the time of assessment. 5. The retrospective amendment made by the Finance Act, 1974 may also be noted. The deduction, under section 80-O, will be admissible only with reference to the income which is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India or having been converted into convertible foreign exchange outside India, is brought into India by or on behalf of the assessee in accordance with any law for the time being in force for regulating payments and dealings in foreign exchange. This provision takes retrospective effect from April 1, 1968. 6. The benefit of section 80-O will, with effect from April 1, 1975, i.e., assessment year 1975-76, be available to Indian companies only, and will not be available to other assessees. Accordingly, agreements entered into by a person other than an Indian company will not be eligible for approval for the assessment year 1975-76 and onwards. Further, approval already given in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also state the arrangements available with the applicant for rendering such technical services and the mode of rendering such services) 6. Does the agreement provide for supply of technical know-how or rendering of any services other than those covered by section 80-O (e.g., use of trade marks or supply of goods), if so, please specify them and also the amount of consideration receivable/received in respect of them 7. If the technical know-how falls under section 5(a)(i) above, please indicate : (a) How the applicant acquired it or what arrangements he has made for acquiring it; (b) What are the applicant's own rights in respect thereof; (c) Whether its provision to the other party to the agreement involves— (i) transfer of all or any rights of the applicant in respect of it; if so, please specify the nature and extent of the right transferred and the manner of its transfer; (ii) the imparting of any information concerning its working or use; if so, please specify the information imparted and the manner of its imparting; (iii) its use by the other person to the agreement; if so, please specify the nature and manner of the use 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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