TaxTMI 
TaxTMI 
2005 (11) TMI 55
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....the Act. The facts are few and may be set out at the threshold. The appellant is a partnership concern comprising legal practitioners, specializing in cases involving intellectual property rights and disputes relating to patents, trademarks, copyrights and designs, etc. For the assessment year 1997-98, the appellant declared a total professional receipt of Rs. 2,79,09,740 which included receipts to the tune of Rs. 2,13,35,647 in foreign exchange. Claiming deduction under section 80-O for an amount of Rs. 1,06,68,824, the appellant declared its net taxable income at Rs. 19,05,515 only. The Assessing Officer completed the assessment in the process holding that the deduction allowable under section 80-O of the Income-tax Act was limited ....
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.... "Section 80-O.- Where the gross total income of an assessee, being an Indian company or a person (other than a company) who is resident in India, includes any income 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 or registered trademark and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having been converted into 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....
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.... foreign exchange; (ii) 'foreign enterprise' means a person who is a non-resident; (iii) services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India; (iv) 'competent authority' means the Reserve Bank of India or such other authority as is authorized under any law for the time being in force for regulating payments and dealings in foreign exchange." A careful reading of the above would show that a deduction is admissible under the provision only if the income of the assessee includes receipts by it from the Government of a foreign State or a foreign enterprise, payments in convertible foreign exchange in consideration among others of technica....
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.... the contention urged by Mr. Vohra. The legislative intent behind the provision of section 80-O is much too clear from Explanation (iii) to the same to need any detailed exercise involving interpretation of that provision. The Explanation makes it abundantly clear that a deduction under section 80-O is not allowable if the foreign receipts are relatable to services rendered in India. A professional's service can be rendered within India as much as it can be rendered from India. It would depend upon the nature of the service and not on whether the provider and the recipient of the service are located in two different countries. For instance, in cases where a professional offers his professional advice to a client who is stationed outside Ind....
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.... 273 ITR 92. Both these decisions do not, in our view, state the law differently. In Mittal Corporation's case [2005] 272 ITR 87 (Delhi), the assessee had received commission as buying agent of a foreign enterprise. The question was whether information concerning commercial knowledge, experience and skill to outside parties for its use outside India qualified for a deduction under section 80-O. The court answered the question in the affirmative and upheld the view taken by the Tribunal that the receipts qualified for deduction under the provisions of section 80-O. In Inchcape India's case [2005] 273 ITR 92 (Delhi), the assessee was providing information in respect of research, local suppliers for various products, availability of product....
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....assurance test. The assessee applied to the Central Board of Direct Taxes for the approval of the agreement under section 80-O of the Act as it then existed. The Board rejected the request for approval on the ground that the technical service was not rendered outside India. The writ petition, challenging that view, was dismissed by a single judge in limine. In appeal against the said order, the Division Bench of the High Court of Bombay held that the assessee rendered a technical service by testing the samples and giving the results to the foreign company. Since the testing and certification were done by the assessee in India, observed their Lordships, the assessee was not entitled to a deduction of the technical service fee received from t....