Law:

Section:

Section 80RRA of the Income-tax Act, 1961 - Deductions - Remuneration received for services rendered outside India - Assessment year 1998-99 - Whether to earn deduction in terms of section 80RRA, physical stay or physical work outside India is necessary - Held, yes Words and phrases : 'For any service rendered outside India', as occurring in section 80RRA of the Income-tax Act, 1961 FACTS Assessee No. 1 was a technician who was hired by a foreign firm for supply of service in the light of his experience in the international market and his services were rendered from India. Assessee No. 2 was appointed by another foreign company as a consultant to provide professional, managerial and technical services in the petroleum sector while staying in India. Both the assessees filed applications before the competent authority for grant of approval under section 80RRA. In the case of the first assessee, the application was rejected stating that no foreign visits were made for rendering any service and in the case of the second assessee, the competent authority limited approval for exemption to the proportion of stay and work abroad with the total amount received. The assessees filed separate writ petitions before the Single Judge who, by a common order, allowed the petitions and directed the authorities to provide deductions under section 80RRA to both the assessees. On appeal : HELD An analysis of section 80RRA reveals that in order to be entitled to the deduction or benefit of tax reduction at the rate enumerated in the section, the assessee, who is a citizen of India, must have received the sum (i)by way of salary or remuneration; (ii)in foreign convertible currency; and (iii )from an employer (being a foreign employer or an India concern) for any service rendered by him outside India. Unless the three conditions are satisfied, the assessee is not entitled to claim the benefit of deduction. [Para 14] The Single Judge had committed an error in holding that physical stay outside India for the purpose of deduction in terms of section 80RRA was unnecessary. The exercise undertaken or the interpretation given to the section by the Single Judge was against the plain reading…

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