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TMI Blog2009 (3) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... ount was received in foreign exchange? 3. Whether in the facts and circumstances of the case, the benefit of Section 80-O would also be available to a shipping agent?" 2. The assessee was a private limited company. The relevant assessment years are 1994-95 to 1997-98. For the assessment years 1994-95 and 1995-96 the assessee filed its return on 9.11.1994 admitting certain income. Subsequently, a revised return has been filed on 9.1.1996 explaining the reason by way of note enclosing the revised return claiming deduction under Section 80-O of the Act, which is based on the decision of the Delhi Bench of the Tribunal in the case of CAPTAIN K.C.SAIGAL VS. ITO (53 TTJ 564) and the Circular of CBDT No.731 dated 20.12.1995. The original assessment for the said two assessment years were completed under Section 143(3) of the Act by allowing deduction under Section 80-O as claimed by the assessee. Later on notice under Section 148 was issued by the assessing officer for both the years and re-assessment was completed by disallowing the claim of deduction under Section 80-O which was allowed in the original assessment for the reason that the service rendered by the assessee woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of J.B.BODA AND CO. PVT. LTD. VS. CENTRAL BOARD OF DIRECT TAXES reported in (1997) 223 ITR 271. 5. We heard the argument of the learned counsel appearing on either side and perused the material on record. 6. In respect of the assessment year 1994-95 and 1995-96, revision of assessment has been made. It is an admitted fact that the assessing officer has completed the assessment originally after obtaining complete details as required him and as provided under the Act. The assessee himself filed a revised return as stated in the summation of facts on 9.1.1996 which has been scrutinised and ultimately the deduction under Section 80-O has been allowed. On the reading of the order of the Tribunal as well as the lower authority, there is no reason, what so ever, has been stated by the revenue to the effect that new materials were received by the assessing officer and the assessing officer on the basis of the new materials based his opinion that there was escapement of assessment. There was no material placed on record to show that the assessee had suppressed any material fact or has failed to disclose fully and truly all material facts necessary for assessment. It is also on record t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided or agreed to be made available or provided to the foreign enterprise by the assessee and (ii) the consideration for such services are to be 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 law for the time being in force for regulating payments and dealings in foreign exchange." 8. In the case on hand, there is no dispute that the assessee is a shipping agent and its activities are that on the basis of information received from the parties, intending to send cargo, they used to contact the foreign ship owners, which would meet the needs of carrying of cargo. The assessee had to ensure that the ship owner should pick up the cargos and would transport it within the time and at the agreed rates. The information regarding availability of cargo to ship owners and their destinations at frequent intervals enables the ship owners to program the ships travel touching the Indian coasts accordingly. The assessee used to contact the ship owners whenever they send the cargo and in that process they exchange various types of special in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion income as buying agent of foreign enterprises, the assessee claimed deduction under Section 80-O of the Act on commission income which was earned on providing commercial information to the foreign buyers. It was held that it cannot be said that the assessee must provide "technical services" even where it receives consideration for only providing commercial information. The section is required to be interpreted accordingly. On the facts, the Tribunal clearly held that there is no dispute that it is commercial information which the assessee provided to the foreign buyers and in consideration thereof, the assessee received commission which was in convertible foreign exchange. In view of this, the claim made by the assessee cannot be denied under section 80-O of the Act." 12. In the case of Godrej and Boyce Mfg. Co. Ltd. Vs. Potnis (S.B.), CIT (Chief), (1993) 203 ITR 947(Bombay High Court), the petitioners who manufactured steel and metal products entered into two agreements with a foreign company for establishing a plant in Indonesia. One agreement was titled "technical assistance agreement" and the second agreement was titled "management service agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Since the contract obliged the assessee to make available information and render services to the foreign client of the nature outlined in section 80-O and Circular No. 700 dated March 23, 1995, the assessee received the payment which was in convertible foreign exchange. Therefore, the assessee had to be given the benefit of deduction available under section 80-O of the Act. The Tribunal erred in restricting the claim of deduction under section 80-O to 70 per cent." 14. In the case of Central Board of Direct Taxes Vs. Oberoi Hotels (India) Pvt. Ltd, (1998) 231 ITR 148, the respondent hotel entered into an agreement with a foreign enterprise, a Nepal company, which owned and operated a hotel in Khatmandu. The agreement provided for use by the foreign enterprise of the respondent's name and was to remain in force for fifteen years with an option of extension for five years. The respondent would recruit and train the requisite staff for the hotel through training programmes. The respondent would use its best efforts to advertise and promote the business of the hotel through its existing facilities. The respondent would make available for the hotel, its staff of consultan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essional services" had been inserted in the place of the words "technical services", in a matter of the present nature and the legislative intention to give relief, the term "technical services" must be interpreted to include professional services also. Considering the scope of the agreement and the width of section 80-O, the agreement provided for "information concerning industrial, commercial or scientific knowledge, experience or skill made available" by the respondent to the foreign enterprise for running of the hotel. Royalty, commission or fees could be in terms of a percentage of the profits earned by the foreign enterprise on account of services rendered by the Indian company. It was the substance of the case which mattered and not the name. The Central Board of Direct Taxes was not right in not granting approval of the agreement to the respondent under section 80-O of the Act. [Since the matter related to the year 1970 the court did not send the matter back to the Central Board of Direct Taxes for fresh appraisal.] After the amendment of section 80-O by the Finance (No. 2) Act of 1991, the words "technical or professional services" have been inserted in the place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of brokerage in terms of foreign currency and the same is received by the assessee through the Bankers after converting the said deduction in foreign currency into rupees, which according to the assessee, is as good as receiving the payment in convertible foreign exchange as the outflow of foreign currency from India is restricted to that extent. The decision of the Supreme Court in the case of J.B.BODA AND CO. PVT. LTD. VS. CENTRAL BOARD OF DIRECT TAXES reported in (1997) 223 ITR 271 is in favour of the assessee. In that case, the Oil and Natural Gas Commission had insured all their offshore oil and gas exploration and production operations with an Indian insurance company. In respect of this risk, the appellant, a reinsurance broker, contacted a company in London who were brokers for placement of reinsurance business. The appellant furnished all the details about the risk involved, the premium payable, the period of coverage and the portion of the risk sought to be reinsured. The London brokers contacted various underwriters and after getting confirmation about the portion of the risk the foreign reinsurers were prepared to undertake, informed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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