1988 (11) TMI 99

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....he assessment year 1970-71. Under an agreement dated April 1, 1954, "Stankoimport", Moscow, granted to the assessee sole agency for the sale of its ball and roller bearings for the territories mentioned on payment of trade commission. The assessee was required to send, under the terms of this agreement, truthful reports of the activities of competitors to Stankoimport, particularly as regards their prices, terms of delivery and technical designs. After the 10-year span covered by this agreement expired, Stankoimport addressed a letter dated February 25, 1965, to the assessee. The letter stated that Stankoimport agreed to pay commission to the assessee in consideration of technical services, as mentioned therein, which were to be furnishe....

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....0 thereof was exempt under the provisions of section 80-0 of the Act. The Income-tax Officer accepted the claim and assessed accordingly. On November 23, 1972, the. Additional Commissioner passed an order under section 263 of the Act bringing the said amount of Rs. 4,59,000 to tax. He did so on the ground that the conditions of section 80 were not satisfied because (i) Stankoimport was not a foreign company ; (ii) the said letter was not an agreement ; and (iii) no commercial or technical services were rendered thereunder. The Tribunal, before whom the assessee went in appeal, concluded in the assessee's favour after an elaborate judgment. It held that all the conditions of section 80-0 were satisfied and the commission amounting to Rs. ....

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....f twenty-five percent. thereof." Section 85C was deleted with effect from April 1, 1968, by the Finance (No. 2) Act, 1967, which introduced section 80-0. At the material time, section 80-0 read thus " '80-0. Deduction in respect of royalties, etc., received from certain foreign companies. -Where the gross total income of an assessee being Indian company includes any income by way of royalty, commission, fees or any similar payment received by it from a foreign company in consideration for the use 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 or provided or agreed to be made avail....