Notification No. 3210

An exemption granted under section 104 of the Income-tax Act, 1961

What this is

Notification No. 3210 was published on 8 August 1969. Its subject is An exemption granted under section 104 of the Income-tax Act, 1961.

This grants an exemption or a relief under a provision that allows one. Read the conditions attached: an exemption notification is construed strictly, and a condition missed is the exemption lost.

What it does

In exercise of the powers conferred by sub-section (3) of section 104 of the Income-tax Act, 1961, and in partial modification of notification S.O. 2007 dated 6 June 1967, the Central Government, being of opinion that it is necessary and expedient in the public interest so to do, exempts every Indian company, other than an investment company as defined in clause (ii) of section 109, from the operation of section 104 in respect of the previous year relevant to the assessment year commencing on 1 April 1970 and any subsequent year. The exemption is subject to two provisos. The company must, in the course of its business, export goods or merchandise out of India, or perform constructional operations or render services outside India, or provide or make available to an enterprise, institution, association or other body established outside India any technical know-how, being a patent, invention, model, design, secret formula or process or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill; and the sale proceeds of such exports or the income from those activities must be received in or brought into India by or on behalf of the company in accordance with the Foreign Exchange Regulation Act, 1947 and the rules and orders made under it. Further, the sale proceeds from such exports and the gross receipts from those activities must, during the previous year, amount in the aggregate to 50 per cent or more of the aggregate of the sale proceeds and all other gross receipts of the business credited to the profit and loss account of the company for that year.

Who it reaches

Indian companies exporting goods, executing construction or services abroad or supplying technical know-how outside India
investment companies within clause (ii) of section 109, which are excluded from the exemption
assessing officers considering an order under section 104 for insufficiency of distribution of dividends

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.104	no counterpart recorded

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

In exercise of the powers conferred by sub-section (3) of section 104 of the Income-tax Act, 1961 (43 of 1961), and in partial modification of the Ministry of Finance (Department of Revenue and Insurance) Notification No. S. O. 2007 dated the 6th June, 1967, the Central Government, being of opinion that it is necessary and expedient in the public interest so to do, hereby exempts every Indian company [not being an investment company as defined in clause (ii) of section 109 of that Act] from the operation of the said section 104, in respect of the previous year relevant to the assessment year commencing on the 1st day of the April, 1970, and any subsequent year :

Provided that such Indian company, in the course of its business,---

(a) exports any goods or merchandise out of India ; or

(b) performs any constructional operations or renders any service outside India; or

(c) provides or makes available to any enterprise or institution, association, or other body established outside India, any technical know-how being any patent, invention, model, design, secret formula or process, or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill,

and the sale proceeds of the exports referred to in item (a) or, as the case may be, the income accruing to the company from the activities of its business referred to in item (b) or item (c) is received in or brought into India by the company or on its behalf in accordance with the Foreign Exchange Regulation Act, 1947 (7 of 1947), and any rules and orders made thereunder :

Provided further that the sale proceeds derived by the company from the exports, if any referred to in item (a) and the gross receipts derived by it from the activities of its business referred to in item (b) or item (c) or both, during the previous year, amount, in the aggregate, to 50 per cent. or more of the aggregate amount of the sale proceeds and all other gross receipts of the business during the previous year credited to the profits and loss account of the company

From when

the previous year relevant to the assessment year commencing on 1 April 1970.

What to watch

The exemption applies from the previous year relevant to the assessment year commencing on 1 April 1970 and subsequent years.
Receipt of the proceeds in or into India in accordance with the Foreign Exchange Regulation Act, 1947 is a condition, not merely evidence of the export or service.
The 50 per cent test is applied on the aggregate of sale proceeds and gross receipts of the business credited to the profit and loss account for the previous year.
The notification only partially modifies S.O. 2007 dated 6 June 1967, which continues to operate so far as it is not modified.

Where you meet it

In proceedings under section 104 against a company for failure to distribute the statutory percentage of its profits as dividends.

An example

Ours, not the Board’s: a worked case built from the rule the instrument sets, to show how it falls out.

An Indian company whose profit and loss account for the previous year credits sale proceeds and other gross receipts of Rs. 1 crore, of which Rs. 55 lakh is export sale proceeds brought into India in accordance with the Foreign Exchange Regulation Act, 1947, satisfies the 50 per cent test and is outside the operation of section 104 for that year.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 347 — 727. Book publishing company - Whether qualifies to be treated as company engaged in manufacture or processing of goods 7 July 1982
Circular No. 24 — 728. Whether production of motion pictures amounts to manufacture or processing of goods within the meaning of section 1 23 July 1969
Notification No. 2007 — An exemption granted under section 104 of the Income-tax Act, 1961 6 June 1967
Notification No. 2817 — An exemption granted under section 104 of the Income-tax Act, 1961 14 August 1964

← Notification No. 4427 · Notification No. 3070 →

What a notification is. A notification is made under a power the Act itself gives, and within that power it is law — unlike a circular, which only binds the department. Its reach is the reach of the enabling provision and no wider, and the date it carries decides from when it works.

Source: the Income Tax Department’s own published text — its page for this instrument.