TaxTMI 
TaxTMI 
TaxTMI 
2018 (8) TMI 868
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....w of the consistent stand of the respondent for the assessment years 198586 to 1991­-92 that the entirety of the net receipts of the Appellant were eligible for deduction under section 80­O of the Act, he had no jurisdiction to take the view that a portion of such receipts was attributable to alleged "routine services" in the present year in the absence of any change in the facts and circumstances? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal ought to have held that the respondent had no jurisdiction to categorize a portion of the receipts of the Appellant for professional services as attributable to alleged "routine services" in the light of the admitted position that the Appellant was rendering a consolidated report? (iii) Whether on the facts and in the circumstances of the case and in law the Tribunal ought to have held that even the alleged "routine services" were an integral and an indivisible part of the professional work carried out by the Appellant and the consideration thereof was eligible for deduction under section 80­O? (iv) Whether on the facts and in the circumstances of the case and in law, the Tribunal erred....
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....nce and skill; And Whereas the Indian Company which is an expert having been found to possess such technical and scientific knowledge, experience and skill and fully equipped for this purpose to the satisfaction of the Foreign Enterprises. At the request of the satisfaction of the Foreign Enterprise, the Indian company has been rendering the technical services referred to herein below to or at the request or on behalf of the Foreign Enterprise, pursuant to an Agreement dated 27th December, 1978; And Whereas the parties hereto are desirous of extending the previous Agreement between them. Now it is hereby agreed by and between the parties hereto as under: 1. The Indian Company agrees to render to render to the Foreign Enterprise or at its request or on its behalf mainly the following technical services or any one of them amongst others: (a) Physical and Chemical test; (b) Sampling analysis; (c) Qualitative and quantitative analytical tests, scientific and technical inspection and verification; (d) Quality evaluation of packing material; (e) Preparation and submission of technical report including project report as and when necessary; (f) Expert advice and certificate....
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.... this arbitrary bifurcation of the fees received for technical services from the foreign company. This, on the ground that the services rendered are part of the continuous operation which culminates into technical services to the foreign party. It is for the final report i.e. Technical services, that it is paid for in foreign exchange by the foreign company. As a consequence of the above, the CBDT while approving the agreement dated 8th March, 1984 for Assessment Year 1985-­86 for the purposes of Section 80­O of the Act varied its earlier approval. Instead of fixing the percentage allowable, the CBDT directed that the consideration attributable to the technical services which would qualify for deduction under Section 80­O of the Act was to be determined by the Assessing Officer. (g) In consequence of the above direction, the Assessing Officer for the Assessment Years 1985-­86 to 1991­-92 allowed the claim for deduction of 50% of the net foreign exchange earnings under Section 80­O of the Act. This on the total fees received from the foreign company after deducting expenses therefrom to earn the foreign exchange. (h) However, during the Assessment Year 1992....
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....otices as it found that regular assessment for Assessment Years 1985-­86 and 199192 were made under Section 143(3) of the Act and deduction under Section 80­O of the Act was granted after due application of mind. Thus, seeking to reopen those assessments were mere a change of opinion as there was no change in facts and / or in law which would warrant issuing notices for reassessment for Assessment Years 1985-­86 and 1991­-92. (k) In the meantime, the Respondent­-Revenue had filed an appeal to the Tribunal from the order dated 14th September, 1995 of the CIT(A) for the Assessment Year 1992-­93. The impugned order dated 27th February, 2007 of the Tribunal holds that the provisions of Section 80­O of the Act have to be applied independently for each assessment year and on consideration of the services rendered by the appellant to the foreign company, it was found that the routine services which are rendered in India would not form a part of preparation and forwarding technical information to be used outside India for deduction under Section 80­O of the Act. This on the ground that the services rendered by the appellant were held routine services render....
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.... involves the activity of inspection, supervision of loading and storage etc. These are activities which are in the nature of routine services and admittedly carried out in India. In the above facts, the impugned order of the Tribunal disallowed the deduction under Section 80­O of the Act to the extent of 20% of the consideration received as attributable to the activity being rendered in India and not being services rendered from India. (e) Thus, the principle of consistency and/or doctrine of precedents would not apply in the present facts, as undisputedly there is a change in law. The impugned order of the Tribunal on facts found that the routine services were rendered in India and not from India. Thus, would not qualify for deduction under Section 80­O of the Act. Moreover, the decision of the Tribunal in the case of re­opening of an Assessment for A. Y. 1985-­86 and 1991­-92 being held to be bad by the Tribunal by order dated 4th January, 2007 will not help the Appellant as the tests to be applied to determine whether or not, re­opening of an Assessment is permissible under the law, would be entirely different from assessment done in regular proceedings....
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....ndia. (d) In fact, Mr. Suresh Kumar, learned Counsel for the Revenue invites our attention to the decision of the Delhi High Court in Anand & Anand v/s.CIT 152 Taxman 113 and the Karnataka High Court in the case of H. Raghavendra Rao v/s. DCIT 49 Taxmann.com 425. In both the aforesaid cases, the Courts held that where an Advocate renders services in India, when he argue the matter for the foreign company in India, then the Advocate will not be entitled to the benefit of Section 80­O of the Act. However, when the Advocate gives an opinion to a foreign party, then it would stands covered by Section 80­O of the Act as it satisfies Explanation (iii) thereto, namely - rendering of services from India to a foreign party abroad. (e) It was also contended that the fees are received for the entire report from the foreign company. Thus, the so called routine services are an indivisible part of the report and cannot be excluded. (f) We note that Section 80­O of the act very clearly restricts the benefit of deduction thereunder, only to the extent technical services are rendered from India. The routine services are undisputedly services such as supervising, loading/ unloading/ s....