Harmehak Kaur Anand
Section 44BBB of the Income Tax Act, 1961
Updated: Oct 14, 2022
Section 44BBB of the Income Tax Act, 1961 deals with a special provision for computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects. This provision applies to foreign companies, i.e., non-residents who are engaged in any of the following businesses:
Erection of plant or machinery
Testing or commissioning
All these should be in relation to a turnkey power project which has the approval of the Central Government.
According to section 44BBB (1), 10% of the amount that is paid or is payable, in India or outside, to the assessee or to any person acting on his behalf in connection with the above mentioned businesses will be considered as the profits and gains of such business subject to taxation under the head "Profits and gains of business or profession."
No provision of any section from 28 to 44AA will be allowed when computing profits and gains of foreign companies engaged in the business of civil construction, etc., in certain turnkey power projects under section 44BBB.
Section 44BBB (2) provides for the assesse to claim lower profits and gains than those specified in the previous sub-section. He can do so on fulfilling the following conditions:
Maintains books of accounts and other documents required by section 44AA (2)
Has his accounts audited
Provides a report of that audit as required by section 44AB
The Assessing Officer will then proceed to assess the assessee's total income or loss in accordance with section 143 (3) and determine the sum the assessee must pay or is refundable to him.