2010 (2) TMI 981

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....count of consultancy fee receipts but also in regard to interest income and miscellaneous income. By including such receipts the assessee claimed deduction under section 80-O to the tune of Rs. 1,05,78,996. The Assessing Officer held that the interest from bank and miscellaneous income are not eligible for deduction under section 80-O for the reason that such income is not received in convertible foreign exchange in India and is also not in the nature of consideration for use outside India of any patent, invention, design or registered trade mark. Accordingly deduction under section 80-O was restricted to Rs. 68,40,493 only in respect of consultancy fee receipts. This order attained finality at the Income-tax Appellate Tribunal also. The As....

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....f any patent, invention, design or registered trade mark and such income should also be received in convertible foreign exchange in India. Therefore, the deduction is allowable only when both these conditions are satisfied. In the present case the income is by way of interest on fixed deposit receipt which can never be considered to be consideration for use outside India of any patent, invention, design or registered trade mark. The fixed deposits were placed in India and hence such interest was also received in Indian currency and not in convertible foreign exchange. Thus the claim itself was patently incorrect and hence it amount to furnishing of inaccurate particulars of income so as to levy penalty under section 271(1)(c) of the Act. Re....

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....ng the assessee eligible for claim of deduction under section 80-O is applicable. In the present case deduction under section 80-O was claimed in respect of interest income earned on fixed deposits placed in India. Therefore, such income is neither the consideration for use outside India of any patent, invention, design or registered trade mark, nor such income is received in convertible foreign exchange in India. It is not a case of belief that such income is eligible for deduction under section 80-O without showing that the condition of section 80-O is being fulfilled. When the claim is patently incorrect, it amounts to furnishing of inaccurate particulars of income. Recently similar issue arose before the hon'ble Delhi High Court in the ....