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TMI Blog2018 (8) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... hereunder, 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 80O 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 80O of the Act. - Decided against the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... export of goods by the foreign company from and to India. On expiry of the aforesaid agreement another agreement dated 8th March, 1984 was entered into with the foreign company and the same was renewed by separate agreements from time to time, the last such agreement was dated 31st March, 1994. (c) The salient features of the agreement dated 8th March, 1984 are as follows : "Whereas the Foreign Enterprise is one of the largest world organizations directly or indirectly connected with International Trade, import and export of various sophisticated items in huge quantities and other bulk movements between International boundaries; And Whereas the Foreign Enterprise is often appointed by the Governments of Foreign States to act as inspection agents; And Whereas in the course of its business activities, trade and rendering services, the Foreign Enterprise is required to obtain detailed, specialized and highly technical information, analysis and report concerning various items required to be imported or exported from one country to the other and every time it is not possible to obtain this highly scientific and technical informa5tion from so many countries of the world by depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranging Indian conditions and circumstances. The Indian Company whenever called upon by the Foreign Enterprise will also provide and render technical services such as pre qualification survey, inspection and report, metallurgical consultancy, conducting evaluation, evaluation of corrosion and erosion and leak detection test." (d) In respect of the fees received from the foreign company for technical services rendered under the agreement of 27th December, 1978 and 8th March, 1984, the appellant made claim for deduction under Section 80O of the Act. During the period 1980 to 1984 i.e. A. Y. 198081 to 198485, the appellant approached the Central Bord of Direct Taxes (CBDT) for approval of the above agreements and technical services. The CBDT called upon the appellant to supply the break up of fees received under the following categories : (i) Laboratory / testing charges (ii) Professional charges (iii) Inspection fees (iv) Export fees; and (v) Other expenses (e) On submission of the above break up, the approval was granted from the Assessment Years 198081 upto 198485 being 100% deduction on account of Laboratory / testing charges and 33 1/3 % ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing deduction at 50% of the net foreign exchange earnings received from a foreign company in consideration of the technical services rendered for the Assessment Years 1985-86 to 1991-92. This in view of its activities remaining the same even for A.Y. 1992-93. Further, the CIT(A) draws attention that this very issue of deduction under Section 80O of the Act for Assessment Year 1985-86 was the subject matter of revision under Section 263 of the Act by the Commissioner of Income Tax (CIT). However, it also records the fresh assessment order passed under Section 143(3) of the Act, the Assessing Officer did not disturb the deduction which was granted under Section 80O of the Act in the earlier assessment order which was subject to revision under Section 263 of the Act. On merits also while allowing the appeal, it held that the so called routine services are a part of technical services and cannot be excluded from the services rendered. (j) Thereafter, our attention was drawn to the order dated 4th January, 2007 of the Tribunal, emanating from reopening proceedings under Section 148 of the Act for Assessment Years 1985-86 and 199192. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ought to have followed its earlier decisions, particularly, as there is no change in fact and /or in law. In support, reliance is placed upon the decisions of this Court in PCIT v/s. M/s. Quest Investment Advisors Pvt. Ltd., (Income Tax Appeal No. 280 of 2016) rendered on 28th June, 2018. (b) It is further submitted on behalf of the Appellant that the Tribunal by its order 4th January, 2008 set aside the reopening proceedings taken for Assessment Years 1985-86 and 1991-92, on identical issue as being without jurisdiction. Thus, the Tribunal ought to have allowed deduction under Section 80O of the Act, as has been allowed for the Assessment Years 1985-86 to 1991-92 by the Assessing Officer. (c) In the present case, we find that there has been admittedly change in law w.e.f. A.Y. 1992-93. This by inclusion of sub-clause (iii) of Explanation to Section 80O of the Act. The aforesaid Explanation of Section 80O of the Act added w.e.f. 1st April, 1992 reads as under : "Section : 80O (iii) services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the report. Therefore, it is not permissible to exclude some part of the technical services on the ground that it is rendered in India. (b) Moreover, it is submitted that the use in India of the technical services will not deprive the appellant the benefit of deduction under Section 80O of the Act. In support, Appellant places reliance upon the decision of the Delhi High Court in the case of CIT v/s. Eicher Consultancy Services Ltd., 167 Taxman 64. In the aforesaid case, the assessee therein provided professional services of management consultancy services to a foreign party abroad. The foreign party paid assessee therein in foreign exchange and the assessee claim the benefit of Section 80O of the Act. The services so rendered to the foreign company were used by the foreign company in India. It was in the above context, that the Appellant states that rendering of the services in India, would not deprive the Appellant the benefit of Section 80O of the Act. (c) We find that the aforesaid case would have no application to the present facts, as the services which are being rendered in respect of inspection, loading/ unloading are services which are all rendered in I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant with the foreign company, specifically provides that whatever special expertise or experience is required, keeping in mind the Indian conditions, the said services would be over and above technical services rendered under the Agreement. It would, therefore, be in the nature of special ex-pertize which would not necessarily amount to technical services. (c) 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 80O of the Act. (d) In the above view, this question is answered in the negative i.e. in favour of the Respondent-Revenue and against the appellant-assessee. 8. In the above view, all the substantial questions of law are answered in favour of the respondent Revenue and against the appellant-assessee for all the subject assessment years i.e. Assessment Years 1992-93 to 1997-98. 9. Accordingly, all these five Appeals relating to Assessment Years 1992-93, 1994-95, 1995-96, 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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