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2020 (6) TMI 158 - SC - Income TaxDeduction u/s 80-O - Royalties etc. - income received by the appellants in foreign exchange, for the services provided by them to foreign enterprises - High Court has essentially held that the assessees were merely marine product procuring agents for the foreign enterprises, without any claim for expertise capable of being used abroad rather than in India and hence, the services rendered by them do not qualify as the ‘services rendered from India’, for the purpose of Section 80-O - HELD THAT:- In the setup of the present case, for a proper comprehension of the contents and text of the relevant provision of Section 80-O and Explanation (iii), which are carrying even the minute distinction of the expressions “from India” and “in India”, recourse to lexical semantics has been inevitable. However, in all fairness, the High Court has not only discussed semantics and dictionary meanings but, has equally looked at the object and purpose of Section 80-O of the Act. Hence, without further expanding on this issue, suffice it to say for the present purpose that the submissions against the approach of High Court with reference to the decision in Abhiram Singh [2017 (1) TMI 1419 - SUPREME COURT] does not advance the cause of the appellant. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue. Though the expressions “expert information and advice”, “analysis”, “technical guidance” etc., have been used in the agreements but, these expressions cannot be read out of context and de hors the purpose of the agreement. All the clauses of the agreements read together make it absolutely clear that the appellant was merely a procuring agent and it was his responsibility to ensure that proper goods are supplied in proper packing to the satisfaction of the principal. All other services or activities mentioned in the agreements were only incidental to its main functioning as agent. Significantly, the payment to the appellant, whatever label it might have carried, was only on the basis of the amount of invoice pertaining to the goods. There had not been any provision for any specific payment referable to the so-called analysis or technical guidance or advice. Viewed from any angle, the services of the appellant were nothing but of an agent, who was procuring the merchandise for its principals; and such services by the appellant, as agent, were rendered in India. Even if certain information was sent by the assessee to the principals, the information did not fall in the category of such professional services or information which could justify its claim for deduction under Section 80-O of the Act. In other words, in the holistic view of the terms of the agreements, we have not an iota of doubt that the appellant was only a procuring agent, as rightly described by the High Court. Default clauses effectively demolish the case of the appellant and fortify the submissions of the revenue that the appellant was merely a procuring agent and nothing more. Merely for having a contract with a foreign enterprise and mere earning foreign exchange does not ipso facto lead to the application of Section 80-O of the Act. Circular No.700 dated 23.03.1995 is neither of any application to this case nor of any assistance to the appellant. The appellant is not entitled to claim deduction under Section 80-O of the Act. High Court has rightly analysed the entire matter with reference to the relevant questions and has rightly proceeded on the law applicable to the case. The impugned judgment calls for no interference.- Decided in favour of revenue.
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