TaxTMI 
TaxTMI 
2016 (11) TMI 1010
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.... to render a common judgment in all the appeals. Facts : 3. The facts in brief, in the words of the appellant, are that the appellant firm is an assessee engaged, mainly, in the business of providing commercial services to certain foreign enterprises. For the assessment year 1993-94, the Assessing Officer disallowed the assessee's claim for deduction under section 80-O of the Act on the premise that the assessee has not fulfilled the conditions laid down in the said provision. Aggrieved by the denial of deductions, the assessee filed an appeal. We may, however, add that in I. T. A. No. 437 of 2009, the dispute concerns the assessment year 1995-96. 4. Through annexure-B order, the appellate authority upheld the assessee's claim and allowed the appeal declaring that the assessee is eligible for deduction under section 80-O. Then, it was the turn of the Revenue to assail annexure-B appellate order before the Income-tax Appellate Tribunal ("the Tribunal"). As seen, the Tribunal concurred with the appellate authority and rendered annexure-C order dismissing the second appeal. Further aggrieved, the Revenue has filed before this court an appeal in I. T. A. No. 132 of 200....
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....clause-10 of the circular, it is retrospective in its operation. 10. Referring to the quantum involved in the appeals, the learned counsel would contend that all the appeals fall within the mischief of the circular and as such, the appeals are not maintainable. The learned senior counsel has further submitted that, on the issue of maintainability, the judgment of the hon'ble Supreme Court in CIT v. Surya Herbal Ltd. [2013] 350 ITR 300 (SC) ; [2011] 243 CTR (SC) 327 is distinguishable. 11. Adverting to the merits, the learned senior counsel, having taken us through section 80-O of the Act once again, has submitted that the provision contemplates two contentions : (i) Services or the information provided by an Indian company being used by a non-resident outside India in its decision-making process ; (ii) An Indian rendering a technical service outside India. 12. According to the learned senior counsel, once the principal provision is read with clause (iii) of the Explanation appended to the section, it lends itself to no other interpretation that what has been stated above. Once the service is "used" by a foreign entity outside India, contends the learn....
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....005] 273 ITR 92 (Delhi), E.P.W. Da Costa v. Union of India [1980] 121 ITR 751 (Delhi) and CBDT v. Oberoi Hotels (India) P. Ltd. [1998] 231 ITR 148 (SC). 16. The learned counsel for the other assessees have adopted the learned senior counsel's submissions. Issues : 1. Whether the appeals filed by the Revenue are maintainable in the face of Circular No. 21 of 2015, dated December 10, 2015 ? 2. Whether the services rendered by the assessees are from India or in India ? Issue No. 1 17. The Central Board of Direct Taxes, Government of India, has revised its policy of litigation by fixing monetary limits for filing the appeals by the Department before the Income-tax Appellate Tribunal, the High Courts, and the Supreme Court. As seen from paragraph No. 3 of the Circular No. 21 of 2015, the monetary limit of the tax dispute before any High Court shall be Rs. 20,00,000 and above. Admittedly, in none of the appeals before us the dispute crosses Rs. 20,00,000. Further, from paragraph 10 it is explicit that the circular operates retrospectively. 18. In Surya Herbal (supra), the hon'ble Supreme Court has given the liberty to the Department to move the Hi....
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....me is 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 any law for the time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction of an amount equal to fifty per cent. of the income so received in, or brought into, India, in computing the total income of the assessee : Explanation.-. . . (iii) Services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India." 22. When analysed, section 80-O of the Act stipulates these conditions for any assessee to be entitled to the deductions provided in the provision : (1) the assessee must be an Indian or a person residing in India ; (2) the assessee must receive income by way of commission from a foreign enterprise ; (3) the assessee's receiving the commission must be in consideration of technical or professional services being rendered by it ; ....
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....oting the object as surrounding or including in space : (a) within the bounds of ; within the contour ; surface, or exterior of ; enveloped or restrained by ; contained or included within ; pertaining to or connected with the interior of ; within ; inside ; as, the stars in the sky ; the prisoner in chains ; a story in a book ; a room in the house ; she clasped the child in her arms. 27. In section 80-O of the Act, the constants are the Indian agent ; the foreign principal, and the Indian agent rendering services from India. The variable is, how and where are the services used ? Indeed, if words are plain and unambiguous, it ill behoves us to put a strained meaning on them in the name of interpretation. Here, the expressions employed in section 80-O are deceptively simple : "from India" and "in India". 28. Every nation meets any measure more than half way if it results in the nation's augmenting the foreign reserves. India is no exception. It encourages and provides incentives to those who earn foreign exchange. Over and above the incentive is the facility of deduction from the taxable income in foreign exchange-that is what section 80-O is. The legislative intent behind ....
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....urt of Delhi, the assessee is a consultant "engaged in conducting specialised economic and public opinion research on an all-India basis to assess the attitudes of a wide range of political, social and economic subjects. The British Broadcasting Corporation (BBC) is desirous of using the services of the consultants, especially the technical know-how on survey sampling/ interviewing/ coding tabulation and analysis for use in their country (emphasis supplied). The whole exercise by the BBC is to assess the radio listening habits of the people. 34. In the above factual background, the High Court of Delhi interpreted section 80-O of the Act to hold that BBC can be said to use the information received from the assessee when it formulates or modifies its broadcasting programmes to India. The court has observed that the term "used" is a word of general import. 35. Indisputably, the BBC is in London ; it transmits all its programmes from London propagating its waves across the globe through transponders and transmission stations in various countries, India having no transmission station. Further, there may be programmes catering to the specific needs of the Indian audience and viewer....
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.... the findings of the Tribunal. On facts, it has held that the assessee was providing two types of services involving its dyeing and testing divisions. It concurred with the findings of the Tribunal that the assessee had to work in textile testing, inspection of soft lines, electrical and electronics products according to the existing standards of European and American markets, etc. Of all things, the Delhi High Court has noted that the issue arose much before the insertion of Explanation (iii) to section 80-O of the Act. Li and Fung : 40. In Li and Fung (supra) the assessee claimed to have rendered technical services out of India as a buying agent and thus claimed to be eligible for deduction under section 80-O of the Act. The Assessing Officer, however, concluded that the assessee merely rendered managerial services, not of technical nature. Placing reliance on Mittal Corporation (supra), the High Court of Delhi has held that clearly the services rendered by the assessee required knowledge, expertise, and experience ; and, therefore, the fee it received from foreign enterprises for supply of commercial information sent from India for use outside India was eligible for deduct....
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....e to augment the foreign exchange resources of the country. The assessee can also provide to the foreign enterprise technical and professional services, which expertise it possesses, for earning foreign exchange for the country. The court went on to hold that indisputably the assessee had rendered commercial service to the foreign shipping owner for his use outside India and received a commission in convertible foreign exchange. Hence, the rendering of the commercial service and receiving a commission in foreign exchange by the assessee would entitle the assessee to the benefit of section 80-O. The Twin Aspects : 45. With due regard to the above pronouncements, we, however, feel it necessary to point out that in none of them, two crucial aspects of section 80-O of the Act have not fallen for consideration : (i) What type of services rendered by an Indian entity falls within the sweep of the provision ; (ii) what is the true import of the expression "use outside India ? 46. In Continental Construction (supra), the assessee is a civil construction company. It has executed many products overseas and India. It has entered into eight contracts for the construc....
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....s received from a foreign enterprise outside India ; and third, that the commission was regarding the information relating to the commercial transaction provided by the assessee. 50. On facts, Khursheed Anwar reveals that the assessee has an exclusive agency for promoting and concluding sales contract in the territory of India for machinery and equipment for the leather industry manufactured by M/s. Baggio Technologie s.r.l., Italy. On the strength of the agreement, the assessee worked with the foreign enterprise and also Italy very often. The assessee has produced no materials except the statement. 51. In that context, the court has observed that the benefit under section 80-O of the Act is not available to the assessee for mere asking. Records and materials must support the claim. Absent any materials, the benefit of the said section cannot be claimed as a matter of right, as it is purely a question of fact, which could be considered by the Assessing Officer on the basis of the records. In fact, the Commissioner of Income-tax (Appeals) has rendered a specific finding that the assessee has simply effected the sale of machinery and spares manufactured by the foreign enterpris....
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.... and advice to "HOKO". (b) To keep a close liaison with agencies such as ELA/LLOYDS/SGS especially for organoleptic/Bacteriological analysis and communicates the results of inspection along with its expert comments and advice. (c) To make available full and detailed analysis of the seafood supply situation and prices. (d) To advise "HOKO" and keep them informed of the latest trends/ processes applications in manufacturing and of all valuable commercial and economic information about the markets, Government polices, exchange fluctuations, banking law which will directly or indirectly assist "HOKO" to organise, develop control or regulate their import business from India. (e) To negotiate and finalise prices for Indian Exporters of frozen marine products and to communicate such and other related information to "HOKO" 54. As per the ratio of Continental Construction and Khursheed Anwar (supra), some of the above functions said to have been discharged by the assessee cannot qualify for deduction under section 80-O of the Act. In none of the appeals is there any material placed by the assessees as regards which of the services they have rendered to....