SECTION 80HHB l DEDUCTIONS IN RESPECT OF PROFITS AND GAINS FROM PROJECTS OUTSIDE INDIA
544. Whether the consideration for execution of foreign projects received in non-convertible rupees from bilateral account countries would be covered by the expression ‘convertible foreign exchange’
1. Section 80HHB of the Income-tax Act provides for a deduction in the computation of taxable income of certain assessees from the profits and gains derived from the business of execution of a foreign project or execution of any work forming part of any foreign project undertaken by any other person subject to certain conditions. One of the conditions is that the consideration for the execution of such project or, as the case may be, of such work is payable in convertible foreign exchange.
2. Doubts have been raised as to whether the consideration for execution of foreign projects received in non-convertible rupees from bilateral account countries (e.g., Russian roubles) would be covered by the expression ‘convertible foreign exchange’. It is clarified that for the purposes of section 80HHB, the receipt of such consideration will be treated at par with consideration received in any other convertible foreign exchange.
Circular : No. 563, dated 23-5-1990.
