TaxTMI 
TaxTMI 
2018 (4) TMI 1373
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....er which the services of the Appellant herein were engaged by using his specialized commercial and industrial knowledge about the Indian automobile industry. Sumitomo Corporation also agreed to pay remuneration at the rate of 5% of the contractual amount between Sumitomo Corporation and its Indian customers on sales of its products so developed. The Appellant claimed to have supplied to Sumitomo Corporation the industrial and commercial knowledge, information about market conditions and Indian manufacturers of automobiles and also technical assistance as required by the Corporation. (b) The case of the Appellant was selected for scrutiny by the Income Tax Department, Delhi and in response to notice under Section 143(2) of the IT Act, the Appellant along with others attended the assessment proceedings from time to time justifying the claim under Section 80-O of the IT Act. The Assessing Officer, vide order dated 27.03.2000 under Section 143(3) of the IT Act assessed the total income at Rs. 1,18,43,060/- and determined the sum payable by the assessee to the tune of Rs. 43,25,960/-. Being aggrieved by the order dated 27.03.2000, the Appellant preferred an appeal being No. 272/01-02 ....
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....al, commercial or scientific knowledge, experience or skill or he ever had in possession of any blue prints. Learned senior counsel further submitted that the manner or circumstances under which the proposed multipurpose vehicles of Telco under SAFARI project were finalized are not clear and no documents have been produced on record for the same. Learned senior counsel finally submitted that the decision rendered by the High Court was right and no interference is sought for by this Court. 7) In rejoinder, learned counsel for the appellant contended that the agreement between the parties satisfies the ingredients of Section 80-O of the IT Act entitling the Appellant to get the benefit of deduction as the services rendered by the appellant were in the nature of industrial and commercial knowledge to a foreign enterprise. Discussion:- 8) The Appellant has claimed to have vast experience of the Indian automobile industry and has acquired substantial expertise and experience and is in a position to supply specialized commercial and industrial information about the automobile industry to any foreign enterprise looking for developing its market in India. The Appellant struck a deal wi....
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....hence he is entitled to claim deduction under Section 80-O of the IT Act which had been claimed in the return of income filed. However, the Assessing Officer, by order dated 27.03.2000, disallowed the claim of deduction of Rs. 58,87,045/- under Section 80-O of the Act while holding that the Appellant's services do not qualify for deduction under the relevant Section. 11) In the above backdrop, it is essential to quote Section 80-O (unamended) of the IT Act which reads as under:- "80-O.Deduction in respect of royalities etc. from certain foreign enterprises.--1) 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 by way of royalty, commission, fee or any similar payment received by assessee from the Government of a foreign state or foreign enterprise in consideration for the use outside India 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 of provided or agreed to be made available of provided to such Government or enterprise by th....
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....ngs of this country and establish a reputation of Indian technical know-how for foreign countries. The objective was to secure that the deduction under the section shall be allowed with reference to the income which is received in convertible foreign exchange in India or having been received in convertible foreign exchange outside India, is brought to India by and on behalf of taxpayers in accordance with the Foreign Exchange Regulations. 13) Now coming to the facts of the case at hand, it is evident from record that the major information sent by the Appellant to the Sumitomo Corporation was in the form of blue prints for the manufacture of dies for stamping of doors. Several letters were exchanged between the parties but there is nothing on record as to how this blue print was obtained and dispatched to the aforesaid company. It is also evident on record that the Appellant has not furnished the copy of the blue print which was sent to the Sumitomo Corporation neither before the Assessing Officer nor before the Appellate authority nor before the Tribunal. The provisions of Section 80-O of the IT Act mandate the production of document in respect of which relief has been sought. We,....
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....ints is available on record. The said blue prints were not even produced before the lower authorities. In such scenario, when the claim of the Appellant is solely relying upon the technical assistance rendered to the Corporation in the form of blue prints, its unavailability creates a doubt and burden of proof is on the Appellant to prove that on the basis of those blue prints, the Corporation was able to start up their business in India and he was paid the amount as service charge. 17) Further, with regard to the remuneration to be paid to the Appellant for the services rendered, in terms of the letter dated 25.01.1995, it has been specifically referred that the remuneration would be payable for the commercial and industrial information supplied only if the business plans prepared by the Appellant results positively. Sumitomo Corporation will pay to PASCO International service charges equivalent to 5% (per cent) of the contractual amount between Sumitomo and its customers in India on sales of its products so developed. From a perusal of the above, it is clear that the Appellant was entitled to service charges at the rate of 5% (per cent) of the contractual amount between Sumitomo....