1995 (4) TMI 95 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of the claim for deduction u/s 80-O of the Income-tax Act.
2. Whether the services provided by the assessee qualify for deduction u/s 80-O.
3. Whether the income received by the assessee meets the conditions stipulated u/s 80-O.

Comprehensive Details of the Judgment for Each Issue:

1. Disallowance of the claim for deduction u/s 80-O of the Income-tax Act:
The assessee appealed against the order of CIT(A) which disallowed the claim for deduction of Rs. 14,74,272 u/s 80-O. The case was scrutinized to verify the correctness of the deduction claimed, and the Assessing Officer (AO) denied the deduction, stating that the services provided did not qualify under the guidelines and provisions of section 80-O.

2. Whether the services provided by the assessee qualify for deduction u/s 80-O:
The AO examined the guidelines laid down in Circular No. 253 and concluded that the services rendered by the assessee, being brokerage and liaisoning, did not fall under the category of technical services as required by section 80-O. The AO noted that the services were managerial and not technical, and the agreements were signed on behalf of foreign ship-owners/charterers, not as a principal to principal relationship. The CIT(A) upheld this view, stating that the services rendered were managerial and not technical or professional.

3. Whether the income received by the assessee meets the conditions stipulated u/s 80-O:
The AO observed that the brokerage was received from Indian clients in Indian currency, not in convertible foreign exchange, and the agreements were not directly with the foreign enterprise. The CIT(A) supported this view, emphasizing that the brokerage was credited in Indian rupees and the services did not qualify as technical or professional. However, the Tribunal considered the assessee's arguments and previous Tribunal decisions, noting that the services involved specialized knowledge and skill in the shipping industry, and the brokerage received in convertible foreign exchange or its equivalent met the requirements of section 80-O.

Final Judgment:
The Tribunal concluded that the assessee fulfilled all the conditions stipulated in section 80-O, including furnishing information concerning commercial and scientific knowledge, experience, and skill to foreign ship-owners and receiving income in convertible foreign exchange. Therefore, the assessee was entitled to the deduction specified u/s 80-O. The appeal was allowed.