2000 (4) TMI 152 - AT - Income Tax

Summary

Issues Involved:
1. Eligibility for deduction u/s 80-O of the Income-tax Act, 1961.

Summary:

Issue 1: Eligibility for deduction u/s 80-O of the Income-tax Act, 1961

The department appealed against the CIT (Appeals) order allowing the assessee's claim for deduction u/s 80-O. The assessee, a registered partnership firm in India, received commission income in convertible foreign exchange as a buying agent for foreign enterprises. The assessee claimed that the income was earned by providing commercial and technical information to foreign enterprises, thus qualifying for deduction u/s 80-O.

The Assessing Officer (AO) denied the deduction, arguing that the assessee did not fulfill all conditions of section 80-O, particularly the provision of technical services. The AO referenced Circular No. 72 and concluded that the assessee's services did not meet the criteria for technical services as intended by the section.

The CIT (Appeals) disagreed, noting that the assessee provided detailed commercial information and consultancy services, which were technical in nature. The CIT (Appeals) referenced case laws and the Board's Circular, concluding that the assessee met all conditions for deduction u/s 80-O.

The Tribunal reviewed the submissions and material evidence, agreeing with the CIT (Appeals). The Tribunal noted that the assessee provided commercially technical information, such as design specifications and market trends, which were used by foreign enterprises to make business decisions. The Tribunal emphasized that the term "commercial" in section 80-O includes the type of information provided by the assessee.

The Tribunal also highlighted that the assessee's activities involved specialized commercial knowledge and skill, fulfilling the conditions of section 80-O. The Tribunal referenced the Supreme Court decision in CBDT v. Oberoi Hotels (India) (P.) Ltd., which supported the view that commercial information can qualify for deduction u/s 80-O.

In conclusion, the Tribunal upheld the CIT (Appeals) decision, confirming that the assessee's claim for deduction u/s 80-O was valid and dismissing the department's appeal.