2020 (2) TMI 778 - AT - Income Tax

Deduction u/s 80O - any income received by the assessee from the Government of a foreign State or foreign enterprise in consideration for the useoutside India of any patent, invention, design or registered trade mark - HELD THAT - We are of the considered opinion that no addition would be sustainable in law merely on the basis of suspicion, conjectures or surmises. The assessee had placed on record sufficient documentary evidences to substantiate its claim u/s 80-O with respect to services rendered to MLINT. The claim was duly supported by the confirmatory letter of MLINT as well as RBI approval letter which specifically prohibited devolvement of foreign exchange to the assessee. On the contrary, except for mere suspicion allegation, nothing was brought on record by AO to counter the assessee s claim. It is beyond doubt that the assessee was acting as co-lead manager in the aforesaid issues but the allegations of AO that the fee was received in that capacity through MLINT is without any corroborative evidences. Therefore, the conclusion of CIT(A) could not be faulted with and hence concurring with the same, we dismiss the appeal filed by the revenue.

Summary

Issues:
Quantum of assessee's claim under section 80-O.

Analysis:
The appellate tribunal heard appeals by both the revenue and the assessee contesting the order of the Commissioner of Income-Tax (Appeals) for the Assessment Year 1995-96. The revenue's appeal focused on the assessee's claim under section 80-O. The tribunal carefully considered submissions, relevant material, and judicial pronouncements. The facts revealed that the reassessment proceedings reduced the eligible amount under section 80-O for the assessee. The dispute centered around fees received from various entities, particularly from Merrill Lynch. The reassessment order highlighted discrepancies in the claim made by the assessee, leading to the reopening of the case. The tribunal noted that the assessee defended its claim based on an agreement with Merrill Lynch and RBI approval, asserting that services were rendered as per the agreement. However, the assessing officer found inconsistencies and lack of evidence to support the claim, ultimately reducing the deduction under section 80-O and increasing the total income of the assessee.

The first appellate authority accepted the assessee's claim, emphasizing that fees were received for services rendered as per the agreement with Merrill Lynch. The authority noted the absence of evidence supporting the revenue's contention that the fees were received in the capacity of a co-lead manager. The revenue appealed this decision. During the tribunal proceedings, the revenue reiterated its stance, while the assessee maintained its position supported by the service agreement and confirmatory letter from Merrill Lynch. The tribunal, after careful consideration, found that the revenue's arguments lacked substantive evidence to counter the assessee's claim. The tribunal upheld the first appellate authority's decision, dismissing the revenue's appeal.

Regarding the assessee's appeal related to rectification under section 154, the tribunal noted that the appeal was not pressed by the assessee, and the revenue did not object. Consequently, the appeal was dismissed. In conclusion, both appeals were dismissed by the tribunal on 2nd January 2020.