9911796707
TMI Blog2012 (11) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany is in receipt of foreign currency of Rs.98,32,507/- against professional and technical services rendered by it to the foreign parties. Against this amount, the assessee claimed deduction u/s 80-O of the Act, amounting to Rs.4916254/- being 50% of the gross receipts. Since the gross total income returned was only Rs.3820878/-, it restricted its claim u/s 80-O, to the extent of Rs.3820878/- and accordingly declared nil income. Originally, assessment in this case was made u/s 143(3) on 22.4.1997 at an income of Rs.36,89,530/- after allowing deduction u/s 80-O for the year under appeal. to the extent of Rs.131315/- as against Rs.4916245/- claimed by the assessee by restricting its claim of the deduction in respect of one party i.e. Triune Projects only upon on gross fee of Rs.312700 an expense of Rs.50,000/- was deducted to arrive at net income from the project and allowed 50% of such net income of Rs.262700 (312700-50,000). 4. Aggrieved by the order of Assessing Officer, assessee took up the matter in appeal before CIT(A) and challenged his action in not allowing deduction u/s 80-O as claimed and Ld.AR for the assessee has strongly pleaded that the Assessing Officer is not jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim of deduction u/s 80-O, cannot be allowed. Our attention was also invited by the Ld.Sr.DR to the finding recorded even by the CIT(A) with regard to services rendered to ONGC in India by the assessee company on behalf of foreign companies. In view of these findings, he contended that issue is squarely covered by both the decisions of the Delhi High Court as discussed above which supports department's case and are in favour of the Revenue. 10. Ld.Counsel for the assessee while relying on the basis and reasoning as given by the CIT(A) has pleaded for confirmation of the impugned order. It was further submitted that the order on which Ld.Sr.DR is placing reliance is no more in existence and that order was also passed ex-parte by this bench, which has since been recalled, therefore, basis given in that order cannot be a valid ground to reverse the order of CIT(A). Otherwise, the case of Anand & Anand vs. CIT, 286 I.T.R. 432(Del.) on which reliance has been placed by the department is not applicable to the facts of the case because there is material difference between the issue decided by the Delhi High Court in the case cited supra, as compared to the present case. Reliance placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee in accordance with any law for the time being in force for regulating payments in accordance with and subject to the provisions of this section, [a deduction of an amount equal to................. . [Explanation.-For the purposes of this section,- [(iii) services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India;} 13. It is clear from the plain reading of sec 80-0 that only that income which arises from rendering of services from India and not the services rendered in India are eligible for deduction. In the instant case, the assessee entered into an agreement with the foreign company for rendering services in India on ONGC platform. The issue revolves around the question whether the services so rendered by the assessee in India at ONGC platform on behalf of foreign enterprise would be related as services received by foreign enterprise outsider India or not. In the set aside proceedings, after analyzing the agreement entered by the assessee with foreign enterprise and the nature of services rendered, the AO came to the conclusion that services were rendered by the assessee in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DT categorically states, that as long as the services are provided to a foreign entity, the mere fact that the information used or .services rendered in India would not describe (sic- disentitle the provider of the services to the deduction under s. 80-0 of the Act. In any event there are concurrent findings both by the CIT(A) and the Tribunal that the services rendered by the assessee in the instant case are from India. We find no infirmity in the said conclusion arrived at by the two authorities. No substantial question of law arises in this appeal. This appeal is dismissed." CBDT vide its circular NO.700 dated 23.3.1995 issued a clarification regarding deduction u/s 80-0. The relevant portion of the said clarification reads as under::- "It has been clarified in Explanation(iii) to s. 80-0 that services rendered or agreed to be rendered outside India [i.e. item (b) above] shall include services rendered from India but shall not include services rendered in India. A question has been raised as to whether the benefit of s. 80-0 would be available if the technical and professional services, though rendered outside India, are used by the foreign government or enterprise in India. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign parties out of which some of the foreign parties had entered into an independent contract with the assessee. In lieu of such independent contracts, the assessee had rendered the professional and technical services by way of designing, drawing as well as in the field of engineering to the foreign parties outside India. The services to ONGC were rendered in India by the assessee company on behalf of the foreign companies. The contention of the AO is that services should be rendered outside India for entitlement of relief u/s 80-0. The AR stated that in the light of Circular No.700 dated 23-03- 1995 even if the services are rendered in India, the assessee is entitled to deduction u/s 80-0 in the light of the said Circular and the decision of jurisdictional High court in the case of CIT Vs. Eicher Consultancy Services Ltd. (214 CTR 126)." (Emphasis in the judgments supplied by us) 18. Therefore, the finding of CIT(A) in the instant case was that assessee has rendered services to the ONGC in India. Insofar as services were rendered in India, the assessee is not entitled for deduction u/s 80-0 irrespective of the utilization of such services by the foreign enterprise either in Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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