2005 (6) TMI 482 - AT - Income Tax

Summary

Issues Involved:
Disputed deduction under section 80-O of the Income Tax Act for assessment year 1992-93.

Analysis:
1. The appeal was filed by the revenue against the order of the ld. CIT(A) regarding the deduction of Rs. 60,077 allowed to the assessee under section 80-O of the Act for the assessment year 1992-93.

2. The assessee claimed deduction under section 80-O for rendering various services to foreign enterprises. The ld. Assessing Officer initially disallowed the deduction, stating that no technical or professional services were provided outside India. However, the ld. CIT(A) allowed the deduction based on the services provided by the assessee to the foreign principal, such as collecting market information and identifying clients in India.

3. During the appeal hearing, the revenue argued that the assessee did not provide evidence of technical/professional services outside India. The main service rendered by the assessee was procuring import orders in India for foreign suppliers, with other services being considered incidental. The revenue contended that the deduction under section 80-O was not justified.

4. The assessee presented a certificate from a foreign business associate confirming the technical study conducted by the assessee in the field of Forensic Science. The certificate mentioned payment of commission for orders procured based on the study. The Tribunal noted that while the certificate supported the assessee's arguments accepted by the ld. CIT(A), it also indicated that services were incidental to order procurement in India.

5. Considering the arguments from both sides, the Tribunal decided not to restore the matter to the Income-tax authorities. Instead, it directed that only 20% of the assessee's receipt in convertible foreign exchange should be eligible for deduction under section 80-O, contrary to the 100% accepted by the ld. CIT(A). The deduction under section 80-O was to be calculated accordingly.

6. Ultimately, the appeal filed by the revenue was partly allowed, with the Tribunal adjusting the percentage of eligible deduction under section 80-O for the assessment year 1992-93.