TMI Blog2008 (4) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 80-O of the Income Tax Act, 1961? 2. Brief facts of this case are that the assessee claimed to have rendered technical services out of India as buying agent and thus claimed to be eligible for deduction of Rs. 3,20,81,836/- under Section 80-O of the Income Tax Act, 1961 (for short as Act ). However, as positive income was shown at Rs.1,40,50,080/-, the deduction under the above provision was restricted to the income shown. The Assessing Officer was however of the view that the assessee has merely rendered managerial services not of technical nature and thus requirement of Section 80-O of the Act was not satisfied. The Assessing Officer thus denied the deduction claimed by the assessee. 3. On appeal filed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in Explanation (2) to Section 9(i)(vii) of the Act and therefore, covered under Section 80-O of the Act. Further, the services rendered to the foreign principal no doubt originate in India but terminate outside India only when the foreign client is communicated the contents and factum of rendition of services. It is also submitted that even if the benefit of the services was utilized by the foreign principals to further their business interest in India, the services rendered by the assessee were to be regarded as rendered from India in the terms of the Circular of Central Board of Direct Taxes, No.700 dated 23 rd March, 1995. 7. Learned counsel in support of his contentions has cited a decision of this Court in The Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered outside India to such Govt. or enterprise by the assessee, and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee in accordance with any law for the time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction of an amount equal to fifty percent of the income so received in, or brought into, India in computing the total income of the assessee. Explanation: For the purposes of this section-(iii) Services rendered or agreed to be rendered outside India shall include services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its techniques, requiring special knowledge to be understood. 15. The Supreme Court in Continental Construction case (supra) explained the scope of the term technical services as follows: .the expression technical services has a very broad connotation and it has been used elsewhere in the statue also so widely as to comprehend professional services: vide Section 9(1)(vii) referred to earlier. But we need not digress on this aspect for two reasons. Firstly, whatever, may be the position regarding other professional services , there can hardly be any doubt that services involving specialized knowledge, experience and skill in the field of constructional operations are technical services . 16. In Mittal Corporation case (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... way of royalty, commission, fees or any similar payment from a foreign Government or enterprise:- (a) in consideration for the use outside India of any patent, invention, model, design, secret formula or process, etc; or (b) in consideration of technical or profession services rendered or agreed to be rendered outside India to such foreign Government or enterprise. In either case, the requirement is that the income should be in convertible foreign exchange. It has been clarified in Explanation (iii) to section 80-O 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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