Deductions in respect of certain incomes of Offshore Banking Units and International Financial Services Centre.

1. (1) Where the gross total income of an assessee,—
   • (i) being a scheduled bank, or, any bank incorporated by or under the laws of a country outside India; and having an Offshore Banking Unit in a Special Economic Zone; or
   • (ii) being a Unit of an International Financial Services Centre, includes any income referred to in sub-section (2), there shall be allowed, in accordance with and subject to the provisions of this section, a deduction from such income, of an amount equal to—
   • (a) one hundred per cent of such income for five consecutive assessment years beginning with the assessment year relevant to the previous year in which the permission, under clause (a) of subsection (1) of section 23 of the Banking Regulation Act, 1949 (10 of 1949) or permission or registration under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or any other relevant law was obtained, and thereafter;
   • (b) fifty per cent. of such income for five consecutive assessment years.
2. (2) The income referred to in sub-section (1) shall be the income—
   • (a) from an Offshore Banking Unit in a Special Economic Zone; or
   • (b) from the business referred to in sub-section (1) of section 6 of the Banking Regulation Act, 1949 (10 of 1949) with an undertaking located in a Special Economic Zone or any other undertaking which develops, develops and operates or develops, operates and maintains a Special Economic Zone; or
   • (c) from any Unit of the International Financial Services Centre from its business for which it has been approved for setting up in such a Centre in a Special Economic Zone.
3. (3) No deduction under this section shall be allowed unless the assessee furnishes along with the return of income,—
   • (i) the report, in the form specified by the Central Board of Direct Taxes under clause (i) of sub-section (2) of section 80LA, as it stood immediately before its substitution by this section, 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; and
   • (ii) a copy of the permission obtained under clause (a) of sub-section (1) of section 23 of the Banking Regulation Act, 1949 (10 of 1949). Explanation.—For the purposes of this section,—
   • (a) “International Financial Services Centre” shall have the same meaning as assigned to it in clause (q) of section 2 of the Special Economic Zones Act, 2005;
   • (b) “scheduled bank” shall have the same meaning as assigned to it in clause (e) of section 2 of the Reserve Bank of India Act, 1934 (2 of 1934);
   • (c) “Special Economic Zone” shall have the same meaning as assigned to it in clause (za) of section 2 of the Special Economic Zones Act, 2005;
   • (d) “Unit” shall have the same meaning as assigned to it in clause (zc) of section 2 of the Special Economic Zones Act, 2005.] 80M. [Deduction in respect of certain inter-corporate dividends].—Omitted by the Finance Act, 2003 (32 of 2003), s. 43 (w.e.f. 1-4-2004). 80MM. [Deduction in the case of an Indian company in respect of royalties, etc., received from any concern in India].—Omitted by the Finance Act, 1983 (11 of 1983), s. 29 (w.e.f. 1-4-1984). Original section was inserted by the Finance Act, 1969 (14 of 1969), s. 9 (w.e.f. 1-4-1970). 80N. [Deduction in respect of dividends received from certain foreign companies].—Omitted by the Finance Act, 1985 (32 of 1985), s. 22 (w.e.f. 1-4-1986). Section 85B which was inserted by the Finance Act, 1966 (13 of 1966), s. 17 (w.e.f. 1-4-1966). Omitted section 80N was inserted in place of section 85B which was deleted by the Finance (No. 2) Act, 1967 (20 of 1967), s. 33 and the Third Schedule (w.e.f. 1-4-1968). 1[80-O.Deduction in respect of royalties, etc., from certain foreign enterprises.—2[Where the gross total income of an assessee, being an Indian company] 3[or a person (other than a company) who is resident in India],] includes 4[any income received by the assessee from the Government of a foreign State or foreign enterprise in consideration for the use outside India of any patent, invention, design or registered trade mark] 5*** 6[and such income 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, there shall be allowed, in accordance with and subject to the provisions of this section, 7[a deduction of an amount equal to—
     • (i) forty per cent. for an assessment year beginning on the 1st day of April, 2001; 5. The words “under an agreement approved in this behalf by the Chief Commissioner or the Director General;” omitted by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).Earlier these words were substituted by Act 26 of 1988, s. 26 (w.e.f. 1-4-1989).
     • (ii) thirty per cent. for an assessment year beginning on the 1st day of April, 2002; (iii) twenty per cent. for an assessment year beginning on the 1st day of April, 2003; (iv) ten per cent. for an assessment year beginning on the 1st day of April, 2004, of the income so received in, or brought into, India, in computing the total income of the assessee and no deduction shall be allowed in respect of the assessment year beginning on the 1st day of April, 2005 and any subsequent assessment year]]:

¹ Subs. by Act 28 of 2005, s. 27 and the Second Schedule, for section 80LA (w.e.f. 10-2-2006). Earlier inserted by 32 of 2003, s. 42 (w.e.f. 1-4-2004).

¹ Subs. by Act 32 of 1971, s. 21, for section 80-O (w.e.f. 1-4-1972). Earlier was inserted by Act 13 of 1966, s. 17 (w.e.f. 14-1966). Section 80N was inserted in place of section 85B which was deleted by the Finance (No. 2) Act, 1967 (20 of 1967), s. 33 and the Third Schedule (w.e.f. 1-4-1968).

² Subs. by Act 20 of 1974, s. 9, for “(1) Where the gross total income of an assessee, being an Indian company or a person (other than a company) who is resident in India,” (w.e.f. 1-4-1975).

³ Ins. by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).

⁴ Subs. by Act 26 of 1997, s. 29, for certain words (w.e.f. 1-4-1998). Earlier amended by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).

⁶ Subs. by Act 26 of 1988, s. 26, for certain words (w.e.f. 1-4-1988). Earlier section was amended by Act 20 of 1974, s. 9 (w.e.f. 1-4-1972). Later on amended by Act 21 of 1984, s. 18 (w.e.f. 1-4-1985).

⁷ Subs. by Act 10 of 2000, s. 41, for certain words (w.e.f. 1-4-2001).

1* 2[3[Provided] that such income is received in India within a period of six months from the end of the previous year, or 4[within such further period as the competent authority may allow in this behalf]:]

5[Provided further that no deduction under this section shall be allowed unless the assessee furnishes a certificate, in the prescribed form, along with the return of income, certifying that the deduction has been correctly claimed in accordance with the provisions of this section.]

6[Explanation.—For the purposes of this section,—

1. (i) “convertible foreign exchange” means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the law for the time being in force for regulating payments and dealings in foreign exchange; 2[(ii) “foreign enterprise” means a person who is a non-resident;]] 7[(iii) services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India;] 8[(iv) “competent authority” means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange.] 9* [80P. Deduction in respect of income of co-operative societies.—(1) Where, in the case of an assessee being a co-operative society, the gross total income includes any income referred to in subsection (2), there shall be deducted, in accordance with and subject to the provisions of this section, the sums specified in sub-section (2), in computing the total income of the assessee.

1. (2) The sums referred to in sub-section (1) shall be the following, namely:(a) in the case of a co-operative society engaged in— 1. The provisos omitted by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992). 9. Sub-section (2) omitted by Act 20 of 1974, s. 9 (w.e.f. 1-4-1975).
   • (i) carrying on the business of banking or providing credit facilities to its members, or (ii) a cottage industry, or 1[(iii) the marketing of agricultural produce grown by its members, or] (iv) the purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members, or
   • (v) the processing, without the aid of power, of the agricultural produce of its members, or 2[(vi) the collective disposal of the labour of its members, or (vii) fishing or allied activities, that is to say, the catching, curing, processing, preserving, storing or marketing of fish or the purchase of materials and equipment in connection therewith for the purpose of supplying them to its members,] the whole of the amount of profits and gains of business attributable to any one or more of such activities: 2[Provided that in the case of a co-operative society falling under sub-clause (vi), or sub-clause (vii), the rules and bye-laws of the society restrict the voting rights to the following classes of its members, namely:—
2. (1) the individuals who contribute their labour or, as the case may be, carry on the fishing or allied activities;
3. (2) the co-operative credit societies which provide financial assistance to the society;
4. (3) the State Government;] 3[(b) in the case of a co-operative society, being a primary society engaged in supplying milk, oilseeds, fruits or vegetables raised or grown by its members to—
   • (i) a federal co-operative society, being a society engaged in the business of supplying milk, oilseeds, fruits, or vegetables, as the case may be; or
   • (ii) the Government or a local authority; or
   • (iii) a Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956), or a corporation established by or under a Central, State or Provincial Act (being a company or corporation engaged in supplying milk, oilseeds, fruits or vegetables, as the case may be, to the public), the whole of the amount of profits and gains of such business;]
   • (c) in the case of a co-operative society engaged in activities other than those specified in clause (a) or clause (b) (either independently of, or in addition to, all or any of the activities so specified), 4[so much of its profits and gains attributable to such activities as does not exceed,—
     • (i) where such co-operative society is a consumers’ co-operative society, 1[one hundred thousand rupees]; and
     • (ii) in any other case, 2[fifty thousand rupees]. Explanation.—In this clause, “consumers’ co-operative society” means a society for the benefit of the consumers;]
   • (d) in respect of any income by way of interest or dividends derived by the co-operative society from its investments with any other co-operative society, the whole of such income;
   • (e) in respect of any income derived by the co-operative society from the letting of godowns or warehouses for storage, processing or facilitating the marketing of commodities, the whole of such income;
   • (f) in the case of a co-operative society, not being a housing society or an urban consumers’ society or a society carrying on transport business or a society engaged in the performance of any manufacturing operations with the aid of power, where the gross total income does not exceed twenty thousand rupees, the amount of any income by way of interest on securities 3*** or any income from house property chargeable under section 22. Explanation.—For the purposes of this section, an “urban consumers’ co-operative society” means a society for the benefit of the consumers within the limits of a municipal corporation, municipality, municipal committee, notified area committee, town area or cantonment.
5. (3) In a case where the assessee is entitled also to the deduction under 4[5* 6[section 80HH or section 80HHA] 7[or section 80HHB 8[or section 80HHC 9[or section 80HHD]]] 10[or section 80-I] 11[or section 80-IA]] 12* 13***], the deduction under sub-section (1) of this section, in relation to the sums specified in clause (a) or clause (b) or clause (c) of sub-section (2), shall be allowed with reference to the income, if any, as referred to in those clauses included in the gross total income as reduced by the 14[deductions under 15[section 80HH, 16[section HHA, 17[section 80HHB, section HHC, 18[section 80HHD], section 80-I, 19[section 80-IA], 20[section 80J and section 80JJ]]]. 3. The word “chargeable under section 18” omitted by Act 26 of 1988, s. 27 (w.e.f. 1-4-1989). 5. The words, figures, and letter “section 80H or” omitted by Act 41 of 1975, s. 24 (w.e.f. 1-4-1976). 12. Now section 80J omitted by Act 33 of 1996, s. 29 (w.r.e.f. 1-4-1989). 13. The words, figures and letters “or section 80JJA” omitted by Act 11 of 1983, s. 39 (w.e.f. 1-4-1984). Earlier which was inserted by Act 21 of 1979, s. 22 (w.e.f 1-4-1976). 1[(4) The provisions of this section shall not apply in relation to any co-operative bank other than a primary agricultural credit society or a primary co-operative agricultural and rural development bank. Explanation.—For the purposes of this sub-section,—
   • (a) “co-operative bank” and “primary agricultural credit society” shall have the meanings respectively assigned to them in Part V of the Banking Regulation Act, 1949 (10 of 1949);
   • (b) “primary co-operative agricultural and rural development bank”means a society having its area of operation confined to a taluk and the principal object of which is to provide for long-term credit for agricultural and rural development activities.]

² Ins. by Act 11 of 1987, s. 36 (w.e.f. 1-4-1988).

³ Subs. by Act 49 of 1991, s. 34, for “Provided also” (w.e.f. 1-4-1992).

⁴ Subs. by Act 27 of 1999, s. 53, for certain words (w.e.f. 1-6-1999).earlier amended by Act 20 of 1974, s. 9 (w.e.f. 1-4-1975).

⁵ Ins. by s. 53, ibid. (w.e.f. 1-6-1999).

⁶ Subs. by Act 32 of 1985, s. 36, for Explanation (w.e.f. 1-4-1986).

⁷ Ins. by Act 49 of 1991, s. 34 (w.e.f. 1-4-1992).

⁸ Ins. by Act 27 of 1999, s. 53 (w.e.f. 1-6-1999).

¹ Subs. by Act 11 of 1999, s. 8, for sub-clause (iii) (w.r.e.f. 1-4-1968).

² Ins. by Act 32 of 1971, s. 22 (w.e.f. 1-4-1972).

³ Subs. by Act 11 of 1983, s. 30, for clause (b) (w.e.f. 1-4-1984). Earlier substituted by Act 19 of 1978, s. 18 (w.e.f. 1-4-1979).

⁴ Subs. by Act 21 of 1979, s. 14, for “does not exceed twenty thousand rupees” (w.e.f. 1-4-1980). Earlier substituted by Act 14 of 1969, s. 10 (w.e.f. 1-4-1970).

¹ Subs. by Act 21 of 1998, s. 37, for “forty thousand rupees” (w.e.f. 1-4-1999).

² Subs. by s. 37, ibid., for “twenty thousand rupees” (w.e.f. 1-4-1999).

⁴ Subs.by Act 26 of 1974, s. 11, for “section 80H or section 80J” (w.e.f. 1-4-1974).

⁶ Subs. by Act 29 of 1977, s. 29, for “section 80HH or section 80J” (w.e.f. 1-4-1978).

⁷ Ins. by Act 14 of 1982, s. 32 (w.e.f. 1-4-1983).

⁸ Ins. by Act 11 of 1983, s. 39 (w.e.f. 1-4-1983).

⁹ Ins. by Act 3 of 1989, s. 57 (w.e.f. 1-4-1989).

¹⁰ Ins. by Act 44 of 1980, s. 35 (w.e.f. 1-4-1981).

¹¹ Ins. by Act 38 of 1993, s. 18 (w.e.f. 1-4-1991).

¹⁴ Subs. by Act 41 of 1975, s. 24, for “deduction under section 80H, section 80HH, section 80J and section 80JJ” (w.e.f. 1-4-1976). Section 80J also omitted by s. 25 (w.e.f. 1-4-1976).

¹⁵ Subs. by Act 29 of 1977, s. 29, for “section 80HH or section 80J” (w.e.f. 1-4-1978).

¹⁶ Subs. by Act 16 of 1981, s. 25,for “section 80HHA, section 80J” (w.e.f. 1-4-1981).

¹⁷ Subs. by Act 11 of 1983, s. 39, for “section 80J, section 80JJ or section 80 JJA” (w.e.f. 1-4-1983).

¹⁸ Ins. by Act 3 of 1989, s. 57 (w.e.f. 1-4-1989).

¹⁹ Ins. by Act 38 of 1993, s. 18 (w.e.f. 1-4-1991).

²⁰ Subs. by Act 11 of 1983, s. 39, for “section 80J, section 80JJ and section 80JJA” (w.e.f. 1-4-1984). Now, section 80J omitted by Act 33 of 1996, s. 29 (w.e.f. 1-4-1989) and section 80JJ omitted by Act 26 of 1997, s. 26 (w.e.f. 1-4-1998).