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Interpretation of whether 50% of export commission is taxable under sections 9(1)(vi) and 9(1)(vii) of the IT Act, 1961. Detailed Analysis: The judgment by the Appellate Tribunal ITAT BOMBAY-E involved cross-appeals by the assessee and the Revenue regarding the taxability of 50% of the export commission received by the assessee. The main issue was whether the CIT(A) erred in holding that the commission is taxable under sections 9(1)(vi) and 9(1)(vii) of the IT Act, 1961. The assessee contended that the commission was not taxable, while the Revenue argued for the entire commission to be taxed. The assessee had entered into an agreement with a company and received an export commission. The CIT(A) found that certain services provided by the assessee fell under the definition of 'royalty' as per Explanation 2 to section 9(1)(vi) and reduced the addition to 50% of the total receipt. The assessee appealed, arguing that the services rendered did not qualify as 'royalty/technical services fee' under the Act. The Tribunal considered the definitions of 'royalty' and 'fees for technical services' as provided in Explanation 2 to sections 9(1)(vi) and 9(1)(vii) respectively. The Tribunal analyzed the services mentioned in the agreement and determined that services related to allowing the use of distribution channels, furnishing market information, and permitting advertising expenditure were covered by the definitions of 'royalty' and 'fees for technical services'. Consequently, 75% of the export commission was deemed taxable under the relevant sections. In conclusion, the Tribunal dismissed the appeal of the assessee while partly allowing the appeal of the Revenue. The judgment clarified the interpretation of 'royalty' and 'fees for technical services' under the IT Act, emphasizing that certain services provided by the assessee qualified as taxable income under the specified sections.
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