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2018 (8) TMI 868 - HC - Income TaxDeduction u/s 80O - reassessment - jurisdiction to categorize a portion of the receipts of the Appellant for professional services as attributable to alleged routine services - Appellant was rendering a consolidated report - indivisible part of the professional work - Held that - The jurisdiction to reopen an assessment is a very limited jurisdiction hemmed in by various limitations, amongst them being no notice for reopening can be issued only on a change of opinion. In any event, there is admittedly, a change in law for the subject assessment years from the A.Y. 1985 -96 and 1991 -92 for which reopening notice was issued. Thus, the same would not have any impact on the present proceedings. Section 80 O of the act very clearly restricts the benefit of deduction thereunder, only to the extent technical services are rendered from India. The routine services are undisputedly services such as supervising, loading/ unloading/ storage rendered in India and not out side and / or from India. Therefore, would not qualify for deduction under Section 80 O of the Act. In any event, this routine services such as supervising, loading and storage of good, even if it requires high degree of technical know how and experience, it would still be a services rendered in India and not a service rendered from India. Consequently, it would be hit by Explanation (iii) of the Act to Section 80 O of the Act. - Decided against the assessee.
Issues Involved:
1. Jurisdiction of the Tribunal to categorize a portion of receipts as "routine services." 2. Whether "routine services" are an integral part of professional work eligible for deduction under Section 80-O. 3. Classification of activities like supervising the weight loading and storage of goods as "routine services." Detailed Analysis: Issue 1: Jurisdiction of the Tribunal to Categorize Receipts as "Routine Services" The appellant argued that the Tribunal should have followed the consistent stand of the respondent from the assessment years 1985-86 to 1991-92, where the entirety of the net receipts was eligible for deduction under Section 80-O. The Tribunal's decision to categorize a portion of the receipts as "routine services" was challenged on the grounds that there was no change in the facts and circumstances. The court found that there was a change in law effective from A.Y. 1992-93 with the inclusion of sub-clause (iii) of Explanation to Section 80-O, which specifically excludes services rendered in India. Consequently, the principle of consistency did not apply, and the Tribunal was right in its jurisdiction to exclude 20% of the consideration received as attributable to services rendered in India. Issue 2: "Routine Services" as an Integral Part of Professional Work The appellant contended that the fees received for a consolidated report, which included routine services, should not be bifurcated. The court found that Section 80-O restricts the benefit of deduction only to the extent technical services are rendered from India. Routine services such as supervising, loading/unloading/storage rendered in India do not qualify for deduction under Section 80-O, even if they form part of a consolidated report furnished to the foreign party. Issue 3: Classification of Activities as "Routine Services" The appellant argued that activities like supervising the weight loading and storage of goods required technical knowledge and should not be classified as routine services. The court found that these activities, even if requiring special expertise, do not necessarily amount to technical services. Clause (5) of the Agreement specified that special expertise required under Indian conditions would be over and above technical services. Therefore, these activities, being rendered in India, are not eligible for deduction under Section 80-O as per Explanation (iii). Conclusion All substantial questions of law were answered in favor of the respondent Revenue and against the appellant-assessee for the assessment years 1992-93 to 1997-98. The appeals were dismissed with no order as to costs.
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