Insertion of new section 80HHE

Section 30 of the Finance Act, 1991 deals with insertion of new section 80HHE. Insertion of new section 80HHE. 30. After section 80HHD of the Income-tax Act, the following section shall be inserted, namely:— '80HHE.

Insertion of new section 80HHE.

30. After section 80HHD of the Income-tax Act, the following section shall be inserted, namely:—

'80HHE. Deduction in respect of profits from export of computer software, etc.—(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of,—

(i) export out of India of computer software or, its transmission from India to a place outside India by. any means;

(ii) providing technical services outside India in connection with the development of production of computer software,

there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction of the profits derived by the assessee. from such business:

Provided that no such deduction shall be allowed in relation to the assessment year commencing on the 1st day of April, 1994 or any subsequent assessment year.

(2) The deduction specified in sub-section (1) shall be allowed only if the consideration in respect of the computer software referred to in that sub-section is received in, or brought into, India by the assessee in convertible foreign exchange, . within a period of six months from the end of the previous year or, where the Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as^: the Commissioner may allow in this behalf.

Explanation.—The said consideration shall be deemed to have been received in India where it is credited, to a separate account maintained for the purpose by the assessee with any bank outside India with the approval of the Reserve Bank of India,

(3) For the purposes of sub-section (2), profits derived from the business referred to in that sub-section shall: be the amount which bears to the profits of the business, the same proportion as the export turnover bears to the total turnover of the business carried on by the assessee.

(4) The deduction under sub-section (1) shall not be admissible unless the assessee furnishes in the prescribed form, along with the return of income, the report of an accountant, as defined in the Explanation. below sub-section (2) of section 288, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.

(5) Where a deduction under this section is claimed and allowed in respect of profits of the business referred to in sub-section (1) for any assessment year, no deduction shall be allowed in relation to such profits under any other provision of this Act for the same or any other assessment year.

Explanation.—For the purposes of this section,—

(a) "convertible foreign exchange" shall have the meaning assigned to it in clause (a) of the Explanation to section 80HHC;

(b) 'computer software" means any computer programme recorded on any disc, tape, perforated media or other information storage device and includes any such programme which is transmitted from India to a place outside India by any means;

(c) "export turnover" means the consideration in respect of computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with subsection (2), but does not include freight, telecommunication charges or insurance attributable to the delivery of the computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India;

(d) "profits of the business" means the profits of the business as computed under the head "Profits and gains of business or profession" as reduced by—

(1) ninety per cent. of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in such profits; and

(2) the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India;

(e) "total turnover" shall not include—

(i) any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28;

(ii) any freight, telecommunication charges or insurance attributable to the delivery of the computer software outside India; and

(iii) expenses, if any, incurred in foreign exchange in providing the technical services outside India.'.

[Finance (No.

2) Act, 1991]

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Section 30, The Finance Act, 1991 (Act 49 of 1991).