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Issues: Interpretation of Section 80-O and Explanation 2 to section 9(1)(vii), Evidence of rendering technical services for claiming deduction under section 80-O.
In the judgment by Appellate Tribunal ITAT MUMBAI, the issue revolved around the interpretation of Section 80-O and Explanation 2 to section 9(1)(vii). The Section 80-O pertains to income received from a foreign State or enterprise for the use of patents, inventions, etc., while Explanation 2 to section 9(1)(vii) defines "fees for technical services." The case involved a company providing technical assistance to a foreign enterprise, seeking deduction under section 80-O. Regarding the interpretation of Section 80-O, the Tribunal referred to a case where technical assistance provided by the company was deemed eligible for deduction under section 80-O. The company had deputed specialists to share technical expertise with a foreign enterprise, leading to the conclusion that such services qualified for the deduction under section 80-O. The Assessing Officer and Commissioner of Income-tax (Appeals) were found to be incorrect in denying the deduction based on personnel deputation alone. On the issue of evidence for rendering technical services, the Tribunal noted that the company had submitted technical service agreements approved by the tax authorities. It was emphasized that even a commitment to provide services in the future could qualify for deduction under section 80-O. The Tribunal upheld the company's claim, stating that doubting the genuineness of approved agreements was unwarranted and that the company was entitled to the deduction under section 80-O. In conclusion, the Tribunal's judgment clarified the eligibility criteria under Section 80-O and upheld the company's right to claim deduction for providing technical services to foreign enterprises, emphasizing the importance of approved agreements as evidence for such services.
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