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Issues involved: Determination of non-resident status for tax purposes, eligibility for deduction under section 80-O of the Income-tax Act, 1961.
Issue 1: Non-Resident Status The applicant, an Indian citizen, was considered a non-resident for the financial year 1995-96 as per section 6 of the Income-tax Act, having spent only 65 days in India during that period and a total of 174 days in the preceding four years. Despite returning to India in April 1996 and becoming a resident since then, the applicant was entitled to maintain the application under section 245Q(1) of the Act due to his non-resident status in the preceding financial year. Issue 2: Eligibility for Deduction under Section 80-O The applicant sought a ruling on whether he was entitled to a deduction under section 80-O of the Act for consideration received under a consultancy agreement with Mabanaft AG, Switzerland. The agreement involved providing consultancy services related to the petroleum sector, analyzing government policies, identifying supply opportunities, and advising on commercial interests in the Middle-East market. The applicant, an expert in the petroleum industry with a background in international trade, claimed exemption under section 80-O for the services rendered to Mabanaft. Authority's Decision The Authority determined that the applicant was eligible for the exemption under section 80-O, assuming the services were rendered outside India. The section allows for a deduction for technical or professional services rendered outside India, and the applicant's expertise in the oil industry and the nature of services provided to Mabanaft qualified as technical services. The Authority emphasized that the location of service delivery was crucial, and as long as the applicant's advice was provided abroad, it fell within the scope of services rendered outside India. Therefore, the Authority ruled in favor of the applicant's entitlement to the deduction under section 80-O, subject to compliance with other conditions specified in the Act regarding payment in convertible foreign exchange and timely receipt in India.
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