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TMI Blog2005 (1) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 115A for royalty payment for use of software vide Finance (No. 2) Act, 1991 and as explained in Circular No. 621. 2.3 The CIT(A) ought to have appreciated that by introducing the new section 80HHE, the Legislature intended to give deduction under section 80HHE only with regard to the software export. 2.4 The CIT(A) ought to have appreciated that the principle Specialibus Non Derogant is applicable to the assessee s case." The brief facts of the case are that the assessee had claimed deduction under section 80-O because the assessee-company was providing technical and professional services to persons outside India. However, the Assessing Officer was of the view that there was specific provision under section 80HHE of the Act allowing deduction in respect of profit from export of computer software, etc. According to him, the assessee was mainly engaged in the export of computer software. Therefore, it should have claimed deduction under section 80HHE. In this background, the Assessing Officer rejected the claim of the assessee company for deduction under section 80-O and allowed under section 80HHE. Before the learned CIT (Appeals) it was mainly argued that the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT(A) where it has been found that approval of agreements was granted by the CBDT for the purpose of deduction under section 80-O in earlier years. No such approval was required after the amendment was made by the Finance Act, 1991, w.e.f. 1-4-1992. 5. He then referred to section 80HHB. He brought to our attention sub-section (5) of this section in which it is provided that against the income from foreign project, no deduction can be claimed under this Chapter under the heading, "C. Deductions in respect of certain incomes". He argued that some income from foreign projects was eligible for deduction under section 80-O but when section 80HHB was introduced in 1982 with effect from 1-4-1983, it was specifically provided by sub-section (5) that henceforth deduction will be available only under section 80HHB. However, no such restriction has been provided under section 80HHE. Sub-section (5) of section 80HHE only provides that where deduction has been claimed under section 80HHE, then no deduction shall be allowed in relation to such profits under any other provisions of this Act. He also contended that after the introduction of section 80HHE, section 80-O was not omitted a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 80HHE only provides that if deduction has been claimed under this section, then no further deduction is to be allowed in relation to such profits under any other provisions of this Act. Thus, there can be a situation where services provided by the assessee fall under section 80HHE as well as under section 80-O. In that case we are of the considered opinion that the assessee would have liberty to claim deduction under any provision chosen by it because both the provisions remained in the Act. Before the amendment made by the Finance Act, 1997 with effect from 1-4-1998, section 80-O was also available for "any income by way of royalty, commission, fees or any similar payment received by the assessee from the Government of a foreign State or foreign enterprise in consideration for the use outside India of any patent, invention, design, secret formula or process, or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided or agreed to be made available or provided to such Government or enterprise by the assessee, or in consideration of technical or professional services rendered or agreed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y required specialized knowledge, experience and skill for their proper execution. The argument seems to be that the services in the present case would not be covered by the section because there was no privity of contract between the employees who contributed their technical skill to the foreign Government. We think that this argument cannot be accepted. The assessee is a company and any technical services rendered by it could only be through the medium of its employees, skilled and unskilled, and, even if the contract had not related to a turnkey project, the assessee s employees would have been answerable only to the assessee and none else though, perhaps, in such an event, the other party to the contract may have retained a larger degree of control and supervision in the execution of the contract. Even where the contractor is an individual or firm and not a company, a contract of this magnitude can be executed only through the medium of employees or other personnel engaged by the assessee. The fact that, physically speaking, it is only such employees that render services and that, so far as they are concerned, they render services only to their employer and not to the other con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not has no impact on the point we are trying to make, viz., that, in order to say that a person is rendering such services to another, it is not necessary that the services should be rendered by the former personally and not through the medium of others. For the reasons discussed above, we have come to the conclusion that, under the contracts in question, the assessee had made available technical information to the foreign Government for use outside India and had also rendered technical services to the foreign Government outside India." 8. From the above it becomes clear that the term "provision of technical services" has to be interpreted liberally considering all aspects of execution of the contract. In the case before us some of the services may be overlapping into the area of export of software development but some are also covered under the heading "Provision of technical services". The assessee had the choice of claiming deduction under section 80-O or 80HHE and the sense of any restriction in any of these provisions deduction was claimed under section 80-O and which cannot be denied by the revenue. In these circumstances, we find nothing wrong in the order of the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X
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