9911796707
TMI Blog2009 (3) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr. V. S. Jayakumar for the Respondent. JUDGMENT The Judgment of the Court was delivered by K. RAVIRAJA PANDIAN, J. - The revenue is on appeal against the order of the Income Tax Appellate Tribunal, Madras 'C Bench dated 30.4.2003 made in I.T.A.Nos.1952, 1953, 1954/Mds/2000 and 57/Mds/2000 by formulating the following questions of law: "1. Whether on the facts and circumstances of the case, the Tribunal was right in holding that the re-assessment proceedings to deny the benefit of Section 80-O was only a change of opinion? 2. Whether in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to the benefit of Section 80-O when admittedly no amount was received in foreign exchange? 3. Whether in the facts and circumstances of the case, the benefit of Section 80-O would also be available to a shipping agent?" 2. The assessee was a private limited company. The relevant assessment years are 1994-95 to 1997-98. For the assessment years 1994-95 and 1995-96 the assessee filed its return on 9.11.1994 admitting certain income. Subsequently, a revised return has been filed on 9.1.1996 explaining the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtible foreign exchange, which is the condition precedent for availing the benefit under the Act. 4. On the other hand, Mr.Jayakumar, learned counsel appearing for the assessee contended that the very same set of activity carried on by the assessee has been dealt in an identical case in the case of CAPT.K.C.SAIGAL VS. ITO (53 TTJ 564) by the Delhi Bench of the Tribunal, wherein the activities rendered by the assessee in that case were accepted as one come within the provision 80-O of the Act and as a matter of fact, that order has been accepted by the revenue and has become final. The deduction made are strictly in compliance of the provisions of the Act, which has been approved by the Supreme Court in the case of J.B.BODA AND CO. PVT. LTD. VS. CENTRAL BOARD OF DIRECT TAXES reported in (1997) 223 ITR 271. 5. We heard the argument of the learned counsel appearing on either side and perused the material on record. 6. In respect of the assessment year 1994-95 and 1995-96, revision of assessment has been made. It is an admitted fact that the assessing officer has completed the assessment originally after obtaining complete details as required him and as provided under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the statutory provision as well as the law declared on that provision. Hence, the first question of law is answered in affirmative in favour of the assessee and against the revenue. 7. Questions of law Nos.2 and 3 can be considered together. The ingredients of Section 80-O of the Act for allowing the deduction are, "(i) that the assessee should have income by way of royalty, commission, fees or any similar payment received by the assessee from a foreign enterprise in consideration for the use of any patent, invention, model, 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 the foreign enterprise by the assessee and (ii) the consideration for such services are to be received in convertible foreign exchange in India or having been received in convertible foreign exchange outside India is brought into India, by or on behalf of the assessee in accordance with law for the time being in force for regulating payments and dealings in foreign exchange." 8. In the case on hand, there is no dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmerce in genera; is occupied with business and commerce. ... Generic term for most all aspects of buying and selling." The word "commercial" has been denied in P.ramanatha Aiyar's The Law Lexicon, Reprint Edition, 1987 as follows: "That an article is to be understood in its commercial sense, is to give it a comprehensive sense of how it is known in the general sales or traffic of the markets. ... It means not merely the sense in which merchants understand it, but also the idea which buyers and sellers in the market generally have of the article." 11. The Delhi High Court in the case of Mittal Corporation's case [2005] 272 ITR 87, on the facts that the assessee received commission income as buying agent of foreign enterprises, the assessee claimed deduction under Section 80-O of the Act on commission income which was earned on providing commercial information to the foreign buyers. It was held that it cannot be said that the assessee must provide "technical services" even where it receives consideration for only providing commercial information. The section is required to be interpreted accordingly. On the facts, the Tribunal clearly held that there is no dispute that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was entitled to deduction. The Tribunal held that 30 per cent of the fees received by the assessee was towards services rendered in India and quantified 70 per cent. of fees received for deduction under section 80-O and accordingly directed the Assessing Officer to recompute the deduction. The High Court allowed the appeal holding that "as long as the technical and professional services were rendered from India and were received by a foreign Government or enterprise outside India, deduction under section 80-O of the Act would be available to the person rendering the services even if the foreign recipient of the services utilized the benefit of such services in India. Since the contract obliged the assessee to make available information and render services to the foreign client of the nature outlined in section 80-O and Circular No. 700 dated March 23, 1995, the assessee received the payment which was in convertible foreign exchange. Therefore, the assessee had to be given the benefit of deduction available under section 80-O of the Act. The Tribunal erred in restricting the claim of deduction under section 80-O to 70 per cent." 14. In the case of Central Board of Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l is no ordinary affair. One needs a great deal of expertise, skill and technical knowledge for the purpose. The agreement in question had to be seen as a whole and so examined it was apparent that it provided for the rendering not only of technical services for operating the hotel of the foreign enterprise but also provided for professional and other services in connection with operating of the hotel. Section 80-O was enacted with the twin objects of encouraging the export of Indian technical know-how and augmentation of foreign exchange resources of the country. Although, after the amendment of section 80-O by the Finance (No. 2) Act of 1991 the words "technical or professional services" had been inserted in the place of the words "technical services", in a matter of the present nature and the legislative intention to give relief, the term "technical services" must be interpreted to include professional services also. Considering the scope of the agreement and the width of section 80-O, the agreement provided for "information concerning industrial, commercial or scientific knowledge, experience or skill made available" by the respondent to the foreign enterprise for running of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duction of the commission in foreign exchange before sending the entire consideration in foreign exchange to the foreign ship owners and getting it back from the ship owners in convertible foreign exchange after sending the entire amount would not change the character of receiving the commission in foreign exchange. With reference to the condition of receiving income in foreign exchange in order to come under Section 80-O, the claim of the assessee is that the brokerage is either directly received from the foreign ship owners in convertible foreign exchange or in the alternative the Indian parties making payment of freight charges in foreign currency deduct the amount of brokerage in terms of foreign currency and the same is received by the assessee through the Bankers after converting the said deduction in foreign currency into rupees, which according to the assessee, is as good as receiving the payment in convertible foreign exchange as the outflow of foreign currency from India is restricted to that extent. The decision of the Supreme Court in the case of J.B.BODA AND CO. PVT. LTD. VS. CENTRAL BOARD OF DIRECT TAXES reported in (1997) 223 ITR 271 is in favour of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
