TaxTMI 
TaxTMI 
2007 (8) TMI 331
X X X X Extracts X X X X
X X X X Extracts X X X X
....1996-97 admitting a total income of Rs. 74,620. He also filed another return of income for the above assessment year admitting the same total income of Rs. 74,620 and along with the said return, the assessee also enclosed proof for commission received in foreign currency in support of his claim for deduction under section 80-O of the Income-tax Act. The return was processed under section 143(1)(a). As the assessee had admitted service charges of Rs. 1,000 and claimed huge expenses amounting to Rs. 1,76,242 resulting in net loss of Rs. 1,75,242, he was asked to explain the reasons for claiming such huge expenses against the service charges of Rs. 1,000 received in India. Apart from the above, the assessee was asked to explain as to the natur....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt appeal has been filed by the Revenue on the following substantial questions of law : "(1) Whether, on the facts and circumstances of the case, the Tribunal had enough material to hold, and was right in holding that the assessee was entitled to deduction of interest on loans used for purchase of property ? (2) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the commission earned in foreign currency for sale of foreign company's products in India, would be eligible for the benefit of section 80-O ?" 3. So far as the first question of law is concerned, it is seen that the asses-see has shown the assets in the balance-sheet of the business. The Tribunal had also appreciated the contention ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....be made available or provided to such Government or enterprise by the assessee, or in consideration of technical or professional services rendered or agreed to be rendered outside India to such Government enterprise or enterprise by the assessee, . . ." 6. A reading of the above section shows that the assessee must receive commission from the Government of a foreign State or a foreign enterprise any consideration for the use outside India of any information concerning commercial experience or skill under such Government or enterprise. 7. It appears that the assessee had entered into an agency agreement dated November 1, 1993, for exclusive agency for promoting and concluding sales contracts in the territory of India in respect of mach....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mission was received from the foreign enterprise outside India ; and, thirdly, the commission was in respect of the information relating to the commercial transaction. Of course, both the Assessing Officer and the Commissioner of Income-tax (Appeals) had gone into the question that the commission represents the amount within India and not outside India and had consequently disallowed the claim of the assessee. In our opinion, in terms of section 80-O coupled with the facts pleaded on the basis of the agreement, the commission that was received by the assessee is from a foreign enterprise, namely, M/s. Baggio Technologie s.r.l., Italy, i.e., outside India. Therefore, the finding of both the Assessing Officer and the Commissioner of Income-ta....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ich could be considered by the Assessing Officer on the basis of the available records. As rightly contended by the learned senior standing counsel for the Income-tax Department, except the said explanation, no records were produced. In fact, the Commissioner of Income-tax (Appeals) has rendered a specific finding by observing that the assessee has simply effected the sale of machineries and spares manufactured by M/s. Baggio Tecnologie s.r.l., Italy, and, therefore, the assessee had received only sales commission. It was also found by the Commissioner of Income-tax (Appeals) that the sales commission received by the assessee is not for any activities relating to technical or professional services to the principals, extensive market survey ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e claim for deduction under section 80-O. Inasmuch as the assessee had not produced any material except the explanation offered, the facts of the said case cannot be pressed into service by the assessee and the said judgment is distinguishable. 12. Per contra, the learned senior standing counsel for the Income-tax Department also relied upon a judgment of the Delhi High Court in Anand and Anand v. CIT [2006] 286 ITR 432, where the deduction under section 80-O was disallowed. In our opinion, the said judgment is not in any way useful to the Revenue, as that case refers to the case of an advocate who received certain amount for the professional services rendered in respect of a foreign company. Though a claim was made on the ground that th....