TMI Blog2000 (4) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... a, (2) commission has been received in convertible foreign exchange and (3) it earns income by way of commission in consideration for the use outsideIndiaof information concerning commercial knowledge, experience or skill made available to foreign enterprises. It was further explained that the kind of information supplying to the foreign enterprises is not only commercial, it can also be termed as technical services rendered outside India to foreign enterprises, as the assessee has acquired specialised commercial knowledge, experience and skill in the field of international/foreign trade. The Assessing Officer was of the view that there are three conditions laid down in the Act for claiming the deduction and the assessee has not fulfilled all the three conditions, as he has fulfilled only first two conditions. The third one is technical services which, in his view, the assessee has not fulfilled. It was explained to the Deputy Commissioner of Income-tax as under :--- "That the assessee advises foreign enterprises on matters connected with their trading operations, such as latest developments, forecasting of demand and supply position of variety of goods and merchandise being glob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s view the interpretation of the, words 'technical services' is not correct with reference to section 80-O and on the facts of the case. In his view the objects and spirit of this section is mainly to encourage Indian technical know-how and skill abroad, and assessee fails to prove this condition. The Assessing Officer by referring to Circular No. 72, negatived the claim of the assessee. 2.2 Same submissions were made before the CIT (Appeals) and it was further argued that all the three conditions have been fulfilled by the assessee. Reliance was placed on the decision of Eastman Consultants (P.) Ltd. v. CBDT [1981] 132 ITR 637 (Bom.) and in the case of E.P.W.DA Costa v.UnionofIndia[1980]121 ITR 751 (Delhi). Further reliance was placed on the circular which was referred to by the Assessing Officer and it was argued that this circular helps the assessee, as the conditions as per the circular have already been fulfilled by the assessee. it was further argued before the CIT (Appeals) that assessee has complete records of approximately 200 such manufacturers and regular dealings with 60 to 70 dealers at present. It was further stated that various stages of collecting the information ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter dated14-8-1991. Then he made his bills for his professional charges. Likewise vide letter dated22-8-1991a telex was received from K. Mart for some design selected giving the size and weight required. The information was given on26-8-1991that sample will be made as per specification. Again through a letter dated17-9-1991, the 12 numbers of rug samples as required were couriered by paying Rs. 8,000 as freight charges on11-9-1991. Vide letter dated18-9-1991actual samples were approved. Then assessee filed a working sheet prepared by it indicating landed cost inUSAand also informing that a 40 container will carry 10,000 pieces. These informations are placed at pages 5,6,7 to 17 and 18 to 25 of the paper book filed by the assessee. After considering these informations the CIT (Appeals) was of the view that these working done by the assessee are commercially technical in nature. Therefore, the conditions laid down under section 80-O are fulfilled. The conditions laid down under section 80-O at the relevant period are reproduced here as under :--- "Deduction in respect of royalties, etc. from certain foreign enterprises --- Where the gross total income of an assessee, being an India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orrect in allowing the appeal of the assessee. Further we have noted that assessee entered into agreements regarding supply of information concerning commercial experience regarding the products available inIndia,Pakistan,Sri LankaandBangladeshand the sources from which the same could be obtained. On the basis of commercial informations supplied by the assessee the foreign principal decides the quantity of the items to be purchased and all steps which are connected with the supply of goods are subsidiary because if the dominant purpose is not fulfilled, the subsidiary activity will not come into operation at all, i.e., if the foreign principal does not decide to purchase, then there is no rendering of any subsidiary service mentioned in the agreement as duties of the assessee. 3.2 The meaning of word "commerce" as per Chambers 20th Century Dictionary is "interchange of merchandise on a large scale between nations or individuals". The explanation referred by the learned counsel that primarily the exchange of commodities is conducted on a wide scale and involves transportation over considerable distances. As per this definition the assessee has experience to facilitate such interch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... range of assessee's them envisaged in "patent, invention, model, design etc." This part of the section is separated from the second part with a comma and the word 'or' which by themselves give equal importance to both the parts independently. In other words patent invention etc., or information concerning. Again the second part reads "information concerning industrial, commercial or scientific knowledge, experience or skill'. The usage of comma and 'or' entities each area by itself to the exemption under section 80-O and gives equal importance to each area. Thus, an assessee who provides industrial or commercial or scientific knowledge or experience or skill is entitled to this benefit.. It does not necessarily have to be technical only." 3.5 The second condition which is to be fulfilled is that it should be used outsideIndiaby an outside party and assessee should be paid in foreign convertible exchange for the services rendered. Al] these conditions are satisfied as the information was given to outsideIndiaparty. The information was used outsideIndiaand the payment of commission were received in convertible foreign exchange. The dispute was whether the assessee is providing his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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