ACIT CIR 19(2), MUMBAI V. PEERLESS FABRIKKERNE INTERNATIONAL, MUMBAI

ITA 2274/MUM/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7334 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-03-2010
• Assessment Year: 1993-1994
• Appeal Filed On: 09-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NAVEEN GUPTA
• Assessee Lawyers: SUSHIL U LAKHANI
• Keywords: Opportunity of being heard; Revised return; Set aside
• Section: 143(3); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI. BEFORE SHRI R.V.EASWAR, SR.VP AND SHRI P.M. JAGT AP, AM I.T.A. NO.2274/MUM/2009 (ASSESSMENT YEAR : 1993-94) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIR.19(2), PIRAMAL CHAMBERS, 3 RD FLOOR, LALBAUG, MUMBAI-400 012. VS. PEERLESS FABRIKKERNE INTERNATIONAL, 18, UDHADHI TARANG, JUHU, SANTACRUZ(W), MUMBAI-400 054. PAN:AAAFP1438K (APPELLANT) (RESPONDENT) APPELLANT BY : MR. NAVEEN GUPTA, DR RESPONDENT BY : MR. SUSHIL U.LAKHANI O R D E R PER R.V.EASWAR, SENIOR VICE PRESIDENT: THIS APPEAL BY THE REVENUE RELATES TO THE ASSESSMENT YEAR 1993-94. THE ASSESSEE IS A FIRM ENGAGED IN THE BUSINESS OF EXPORT OF GENE RAL MERCHANDISE AND PROVIDING EXPORT RELATED SERVICES. 2. THE BRIEF FACTS GIVING RISE TO THE PRESENT APPEA L MAY BE STATED. IN THE RETURN, THE ASSESSEE CLAIMED DEDUCTI ON OF RS.23,31,367/- UNDER SECTION 80-O. DEDUCTION OF RS.1,33,59,301/- WAS ALSO CLAIMED UNDER SECTION 80H HC. THE RETURN WAS PROCESSED UNDER SECTION 143(1)(A) WHEREI N THE DEDUCTION UNDER SECTION 80HHC WAS RESTRICTED TO RS.59,09,418/- AND THE EXCESS DEDUCTION OF RS.74,4 9,883/- WAS ADDED BACK AND ADDITIONAL TAX WAS LEVIED. THERE WAS A RECTIFICATION OF THE INTIMATION AND THE TAXABLE INC OME WAS REVISED. THE ASSESSEE HAD FILED AN APPEAL AGAINST THE INTIMATION IN WHICH THE CLAIM UNDER SECTION 80HHC WAS RESTRICT ED. THE CIT(A) ALLOWED DEDUCTION OF RS.1,08,73,180/- UNDER SECTION 80HHC AND RS.31,11,982/- UNDER SECTION 80-O. THE A SSESSING OFFICER GAVE EFFECT TO THE ORDER OF THE CIT(A). SUB SEQUENTLY, A ITA NO.2274/M/09 2 REVISED RETURN WAS FILED BY THE ASSESSEE CLAIMING A MUCH HIGHER DEDUCTION UNDER SECTION 80HHC, THE REASON BEING THA T CERTAIN ITEMS OF EXPORTS EFFECTED BY NESTLE INDIA LTD., ANO THER ENTITY, TO RUSSIA ON WHICH THE ASSESSEE HAD RECEIVED PROFESSIO NAL FEES AND CLAIMED DEDUCTION THEREON UNDER SECTION 80-O IN THE ORIGINAL RETURN, WAS ACTUALLY ASSESSEES EXPORTS TO WHICH IT WAS ENTITLED TO THE DEDUCTION UNDER SECTION 80HHC. WHEN THIS RET URN WAS SELECTED FOR SCRUTINY, THE ASSESSEE ALTERNATIVELY C LAIMED THAT IF DEDUCTION UNDER SECTION 80HHC IS NOT ALLOWED ON ACC OUNT OF EXPORTS BY NESTLE INDIA LTD. TO RUSSIA ON THE GROUN D THAT THEY WERE NOT EXPORTS OF THE ASSESSEE, DEDUCTION SHOULD BE GIVEN ON THE PROFESSIONAL FEES RECEIVED IN RESPECT OF THE EX PORTS FROM NESTLE INDIA LTD. UNDER SECTION 80-O. THE ASSESSMEN T WAS COMPLETED UNDER SECTION 143(3) ON 6.2.1996 IN WHICH THE CLAIMS FOR DEDUCTION UNDER SECTION 80HHC AND SECTION 80-O WERE REJECTED. 3. ON APPEAL, THE CIT(A) BY ORDER DATED 9.8.1996 U PHELD THE ASSESSMENT. THE ASSESSEE CARRIED THE MATTER TO THE TRIBUNAL IN ITA NO.6589/MUM/96. BY ORDER DATED 26.4.2006, THE T RIBUNAL SET ASIDE THE ORDER OF THE CIT(A) ON THE ISSUE OF D EDUCTION UNDER SECTION 80-O AND RESTORED THE SAME TO THE ASSESSING OFFICER FOR FRESH ADJUDICATION. THE DIRECTIONS OF THE TRIBUNAL ARE AS UNDER:- 4. AFTER HEARING BOTH THE PARTIES, WE FIND THAT ASSESSEE HAD NOT FURNISHED NECESSARY EVIDENCES EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LEARNED CIT(A) REGARDING THE NATURE OF SERVICES RENDERED BY THE ASSESSEE. THE ASSESSEE HAD SIMPLY FILED THE COPY OF THE AGREEMENT AND THE LOWER AUTHORITIES ALSO PROCEEDED TO DISPOSE OF THE ISSUE S ON THAT BASIS. IN OUR OPINION, SUCH CLAIM OF THE ASSESSEE CANNOT BE DECIDED MERELY ON THE BASIS OF THE TERMS OF AGREEMENT. THE ASSESSEE MUST ESTABLISH WITH REFERENCE TO THE EVIDENCES THAT SERVICES RENDERED BY IT FALLS WITHIN THE PARAMETER S LAID DOWN IN THE PROVISIONS OF SECTION 80-O. IN TH E ABSENCE OF ANY MATERIAL, IT IS NOT POSSIBLE FOR US TO ADJUDICATE ON THIS ISSUE. ACCORDINGLY, IN THE INTER EST ITA NO.2274/M/09 3 OF JUSTICE, WE SET ASIDE THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER CONSIDERING THE NECESSARY MATERIAL OR EVIDENCES WHICH MAY BE FURNISHED BY THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. THE ASSESSEE SHALL BE GIVEN A REASONABLE OPPORTUNITY OF BEING HEARD IN THIS REGARD. 4. WHEN THE ASSESSING OFFICER TOOK UP THE FRESH ASS ESSMENT PROCEEDINGS PURSUANT TO THE DIRECTIONS OF THE TRIBU NAL, THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO JUSTI FY THE CLAIM FOR DEDUCTION UNDER SECTION 80-O ON THE PROFESSIONA L CHARGES OF RS.65,96,604/-. THE ASSESSEE RESPONDED BY SUBMITTIN G THAT IT HAD AGREED TO PROVIDE ALL SERVICES AS THE EXPORT SU PPLIER IN RESPECT OF THE PRODUCTS TO BE PURCHASED BY BELCOM F ROM INDIA, TO CARRY OUT SURVEY AND FINALIZE SOURCES OF SUPPLY IN INDIA, IN CONSULTATION WITH BELCOM AND TO ENSURE THAT EXPOR TS ARE AT VERY COMPETITIVE PRICES AND THE GOODS SHIPPED CONF IRM TO QUALITY STANDARDS AND STIPULATED TIME SCHEDULE, TO ACT AS CO- ORDINATORS AND FACILITATORS ON BEHALF OF BELCOM IN THE SMOOTH OPERATION OF THE ESCROW ACCOUNT IN LIAISON WITH GOV ERNMENT AGENCIES, SHIPPING, CUSTOMS AND OTHER RELATED MATT ERS INCLUDING SETTLEMENT OF CLAIMS AND DISPUTES, TO MA KE ARRANGEMENTS FOR ALL POSSIBLE ASSISTANCE TO THE PER SONNEL FROM BELCOM VISITING INDIA ON MATTERS RELATED TO EXPORTS AND TO ORGANIZE NECESSARY TECHNICAL KNOW-HOW OR SUPPLY OF EQUIPMENT FROM INDIA IN ORDER TO ESTABLISH FACILITIES AND PRO DUCTS FOR PROCESSING, PACKAGING, HANDLING, DISTRIBUTION, ETC. OF COMMODITIES PROPOSED TO BE PURCHASED FROM INDIA ON A LONG TERM BASIS. IN ADDITION TO THE ABOVE, THE ASSESSEE ALSO RELIED ON SEVERAL AUTHORITIES BEFORE THE ASSESSING OFFICER. 5. THE ASSESSING OFFICER REJECTED THE ASSESSEES CL AIM ON THE GROUND THAT THE ASSESSEE HAS NOT ESTABLISHED WITH E VIDENCE THAT THE SERVICES RENDERED BY IT QUALIFY FOR THE DEDUCTI ON UNDER ITA NO.2274/M/09 4 SECTION 80-O. THE ONLY EVIDENCE ADDUCED BY THE ASSE SSEE, ACCORDING TO THE ASSESSING OFFICER, WAS THE XEROX C OPY OF THE MEMORANDUM OF AGREEMENT DATED 3.1.1992 ENTERED INT O WITH J.V.BELCOM AND XEROX COPY OF THE CONTRACT DATED 25. 2.1992. THE ASSESSING OFFICER ALSO RELIED ON THE ASSESSMENT ORD ER PASSED UNDER SECTION 143(3) ON 6.2.1996 IN WHICH THE CLAIM WAS REJECTED BY THE ASSESSING OFFICER. IN ADDITION, THE ASSESSING OFFICER HELD THAT THE DIRECTIONS OF THE TRIBUNAL WE RE THAT THE ASSESSEE MUST ESTABLISH WITH REFERENCE TO EVIDENCE THAT THE SERVICES ALLEGEDLY RENDERED FALL WITHIN THE PARAMET ERS OF SECTION 80-O, BUT THE ASSESSEE HAS NOT PRODUCED ANY EVIDENC E TO ESTABLISH THAT THE COMMISSION WAS RECEIVED IN CONS IDERATION FOR THE USE OUTSIDE INDIA OF ANY PATENT, INVENTION, MOD EL, DESIGN, SECRET FORMULA OR PROCESS OR SIMILAR PROPERTY RIGHT OR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SC IENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL MADE AVAILABLE OR PR OVIDED BY THE ASSESSEE WITHIN THE MEANING OF SECTION 80-O. AFTER SAYING SO, THE ASSESSING OFFICER REFERRED TO THE AGREEMENT DAT ED 25.2.1992 WITH M/S.BELCOM. HE NOTED THAT UNDER THIS AGREEMENT , THE ASSESSEE UNDERTOOK TO EXPORT VARIOUS GOODS INCLUDIN G NESCAFE WHICH WAS PRODUCED BY NESTLE INDIA LTD. SINCE NESCA FE WAS NOT AVAILABLE WITH THE ASSESSEE, IT ENTERED INTO AN AGR EEMENT WITH NESTLE INDIA LTD. FOR SUPPLY OF NESCAFE AND ON THE EXPORT OF THE NESCAFE AFTER OBTAINING THE SAME FROM NESTLE INDIA LTD, THE ASSESSEE HAD EARNED INCOME IN FOREIGN EXCHANGE. ACC ORDING TO THE ASSESSING OFFICER, NO SERVICES WERE PROVIDED BY THE ASSESSEE TO BELCOM AND THAT THE CONTRACT MERELY SHOWED THE A SSESSEE AS A SELLER AND BELCOM AS A BUYER. IT WAS LIKE ANY OTH ER NORMAL TRADER-EXPORTER THAT THE ASSESSEE WENT OUTSIDE IND IA, CONTACTED BELCOM, QUOTED PRICES AND ENTERED INTO AN AGREEMEN T MERELY TO EXPORT THE GOODS. THE MAJOR PORTION OF THE GOODS WA S EXPORTED BY THE ASSESSEE ITSELF AS TRADER-EXPORTER BUT IN TH E CASE OF NESCAFE, SINCE THE ASSESSEE COULD NOT FULFIL THE RE QUIREMENT OF ITA NO.2274/M/09 5 THE IMPORTER, IT ENTERED INTO AN AGREEMENT WITH NES TLE INDIA LTD. UNDER WHICH THE ASSESSEE AND NESTLE INDIA LTD. SHAR ED THE PROFIT FROM THE EXPORT TRANSACTIONS. ACCORDING TO THE ASS ESSING OFFICER THE COMMISSION WAS NOTHING BUT PART OF THE PROFIT S HARED BY THE ASSESSEE WITH NESTLE INDIA LTD. AND DID NOT QUALIFY FOR DEDUCTION UNDER SECTION 80-O. 6. THE ASSESSING OFFICER ALSO OBSERVED THAT THERE W AS NOTHING IN THE CONTRACT TO SHOW THAT THE ASSESSEE S UPPLIED ANY INFORMATION TO BE USED BY BELCOM. NO EVIDENCE HAD B EEN LED BEFORE THE ASSESSING OFFICER, AS DIRECTED BY THE TR IBUNAL TO SUBSTANTIATE THE CLAIM UNDER SECTION 80-O. FOR THES E REASONS, THE ASSESSING OFFICER REJECTED THE CLAIM UNDER SECT ION 80-O. 7. ON APPEAL, THE ASSESSEE DISPUTED THE FINDING OF THE ASSESSING OFFICER THAT NO MATERIAL OR DOCUMENTARY E VIDENCE WAS ADDUCED IN SUPPORT OF THE CLAIM UNDER SECTION 80-O. IT WAS POINTED OUT THAT THE ASSESSEE HAD GIVEN THE LETTER OF CREDIT FOR THE ENTIRE AMOUNT BY THE IMPORTER AND IT WAS FOR T HE ASSESSEE TO ARRANGE THE SUPPLIES AND BE LIABLE FOR ALL RISKS RELATING THERETO. THE ATTENTION OF THE CIT(A) WAS ALSO DRAW N TO THE AGREEMENT WITH NESTLE INDIA LTD. UNDER WHICH THE AS SESSEE WAS REQUIRED TO MAKE THE EXPORT SHIPMENT OF NESCAFE AND TO ARRANGE FOR THE SHIPMENT TO BE MADE DIRECTLY BY AN INDIAN M ANUFACTURER OR DEALER. IT WAS SUBMITTED THAT UNDER THIS AGREEME NT THE ASSESSEE WAS REQUIRED TO ACT AS A CO-ORDINATOR OF T HE TRANSACTION AND TO CONDUCT QUALITY TESTS BEFORE THE NESCAFE WAS SHIPPED TO BELCOM BY NESTLE INDIA LTD. IT WAS ALSO POINTED OU T THAT THE ASSESSEE HAD ACTED AS ESCROW AGENT OF BELCOM TO REL EASE PAYMENT TO NESTLE INDIA LTD. IT WAS ALSO SUBMITTED BEFORE THE CIT(A) THAT THE ASSESSEES CLAIM WAS SUPPORTED BY DOCUMENTATION AND EXTENSIVE CORRESPONDENCE ENTERED INTO WITH BELCOM AND CITI BANK, WHO OPERATED THE LETTER OF CR EDIT, BILL OF ITA NO.2274/M/09 6 LADING ETC. AND FROM THESE DOCUMENTS, IT WAS CLEAR THAT THE ASSESSEE WAS CO-ORDINATING AND FACILITATING THE ENT IRE TRANSACTION ON BEHALF OF THE FOREIGN IMPORTER. ANO THER SUBMISSION MADE WAS BASED ON THE DEBIT NOTE RAISED BY THE ASSESSEE ON BELCOM WHICH SHOWED THAT THE COMMISSION WAS PAID FOR THE ASSESSEES SERVICES. IN THE ACCOUNTS, THE AMOUNT OF RS.65,96,604/- WAS SHOWN AS PROFESSIONAL CHARGES R ECEIVED FOR SERVICES RENDERED ABROAD. IN ADDITION TO THE ABOV E, IT WAS PLEADED THAT THE ASSESSEE WAS LIABLE TO BELCOM FOR THE SUPPLIES MADE BY NESTLE INDIA LTD. AND IT WAS ONLY AFTER THE ASSESSEE ISSUED ACCEPTANCE OF DISCREPANCIES THAT THE CITI BANK WOULD RELEASE PAYMENT FROM THE ESCROW ACCOUNT. FROM ALL THESE DOCUMENTS, THE ASSESSEE ARGUED BEFORE THE CIT(A) TH AT IT HAS ARRANGED AND FACILITATED THE EXPORTS, ACTED AS ESCR OW AGENT OF THE FOREIGN BUYER AND UNDERTOOK THE RISK AND RESPON SIBILITY FOR THE ENTIRE TRANSACTION AND WAS THUS ENTITLED TO THE DEDUCTION UNDER SECTION 80-O. 8. THE CIT(A) NOTED THE CHRONOLOGY OF THE EVENTS LE ADING UPTO THE PASSING OF THE ASSESSMENT ORDER ON 14.11.2007 P URSUANT TO THE DIRECTIONS OF THE TRIBUNAL AND MADE A PRELIMINA RY OBSERVATION THAT THE ASSESSING OFFICER HAS TAKEN A CONTRADICTORY STAND INASMUCH AS HE HAS HELD, ON THE SAME FACTS, T HAT THE ASSESSEE IS NOT ELIGIBLE EITHER FOR THE DEDUCTION U NDER SECTION 80HHC OR UNDER SECTION 80-O. ACCORDING TO THE CIT(A ), IF THE ASSESSEE WAS ONLY A TRADER-EXPORTER, THEN IT WAS EN TITLED TO ENHANCE THE DEDUCTION UNDER SECTION 80HHC AS CLAIME D IN THE REVISED RETURN AND NOT UNDER SECTION 80-O; BUT IF T HE ASSESSEE CANNOT GET THE BENEFIT OF SECTION 80HHC ON THE EXPO RTS, THEN ITS ALTERNATIVE CLAIM UNDER SECTION 80-O SHOULD BE ALLO WED. AFTER MAKING THIS PRELIMINARY OBSERVATION, THE CIT(A) PRO CEEDED TO REFER TO CIRCULAR NO.700 ISSUED BY THE CBDT ON 23. 03.1995 EXPLAINING SECTION 80-O. AFTER DOING SO, THE CIT(A) PROCEEDED TO ITA NO.2274/M/09 7 EXAMINE THE MOST RELEVANT QUESTION NAMELY WHETHER T HE ASSESSEE RENDERED ANY TECHNICAL OR PROFESSIONAL SER VICES WITHIN THE MEANING OF SECTION 80-O TO QUALIFY FOR THE DEDU CTION. HE ARRIVED AT THE FOLLOWING FINDINGS:- I) THE RECEIPT OF LETTER OF CREDIT FOR THE ENTIRE AMOUNT FROM M/S. BELCOM J.V. OF BELARUS AND ARRANGING THE SUPPLIES IN RESPONSE TO THAT, ALONG WITH ATTENDANT RISKS IN THE TRANSACTION. II) THERE IS NO CONNECTION WHATSOEVER BETWEEN THE APPELLANT AND M/S.NESTLE INDIA LTD. SO AS THE TRANSACTION IS AT ARMS LENGTH. FROM THE AGREEMENT BETWEEN THE APPELLANT AND M/S.NESTLE INDIA LTD. DATED 27.2.1992, IT IS CLEAR THAT THE APPELLANT ACTED AS A COORDINATOR OF THE ENTIRE TRANSACTION AND ALSO CONDUCTED QUALITY TESTS BEFORE THE GOODS WERE SHIPPED TO M/S.NESTLE INDIA LTD. III) THE APPELLANT ACTED AS AN ESCROW AGENT OF M/S.BELCOM J.V. OF BELARUS, WHO RELEASE PAYMENT TO M/S.NESTLE INDIA LTD. IV) THE FACT THAT THE APPELLANT WAS ENGAGED IN COORDINATION AND FACILITATION OF THIS SUPPLY IS EVIDENT FROM THE EXTENSIVE CORRESPONDENCE ENTERED INTO BY THE ASSESSEE, THE FOREIGN PARTY WITH THE CITI BANK IN RESPECT OF LETTER OF CREDIT AND PAYMENT THEREUNDER TO M/S. NESTLE INDIA LTD. V) THE BILL OF LADING ALSO MAKES IT CLEAR THAT THE ASSESSEE WAS COORDINATING AND FACILITATING THE WHOLE OF THIS TRANSACTION ON BEHALF OF FOREIGN IMPORTER. VI) THE DEBIT NOTE RAISED BY THE APPELLANT ON M/S.BELCOM J.V. OF BELARUS MAKES IT CLEAR THAT THE ASSESSEE WAS PAID COMMISSION FOR ITS SERVICES. VII) IT IS ALSO CLEAR FROM THE AUDITED ACCOUNTS THA T THE AMOUNT OF RS.65,96,604/- EARNED BY IT WAS PROFESSIONAL CHARGES RECEIVED FOR SERVICES RENDERED ABROAD. VIII) IT WAS THE APPELLANT, WHO WAS LIABLE TO M/S.BELCOM J.V. OF BELARUS FOR THE SUPPLIES MADE BY M/S.NESTLE INDIA LTD. AND FROM THE PRESENTATION MEMO DATED 2.12.1992 OF CITI BANK, IT IS EVIDENT THAT THE BANK WAS TO RELEASE THE PAYMENT FROM ESCROW ACCOUNT ONLY ITA NO.2274/M/09 8 AFTER ACCEPTANCE OF DISCREPANCIES WAS ISSUED BY THE APPELLANT. THE CIT(A) CONSIDERED THE ABOVE AS TECHNICAL AND PR OFESSIONAL SERVICES RENDERED BY THE ASSESSEE FOR WHICH IT EAR NED THE COMMISSION AND HAS THUS FULFILLED THE CONDITIONS OF SECTION 80-O. IN THIS VIEW OF THE MATTER, HE DIRECTED THE A SSESSING OFFICER TO ALLOW THE DEDUCTION UNDER SECTION 80-O. 9. THE REVENUE IS IN APPEAL AND THOUGH SEVERAL GROU NDS AND SUB-GROUNDS HAVE BEEN TAKEN, THE ONLY ISSUE IS WHET HER THE ASSESSEE IS ELIGIBLE FOR THE DEDUCTION UNDER SECTIO N 80-O AS HELD BY THE CIT(A). IT MUST BE REMEMBERED THAT THE ASSES SMENT ORDER PASSED ON 14.11.2007, WHICH HAS GIVEN RISE TO THE P RESENT APPEAL, WAS PASSED BY THE ASSESSING OFFICER TO GIVE EFFECT TO THE DIRECTIONS OF THE TRIBUNAL. WE HAVE ALREADY REPRODU CED THE OPERATIVE PART OF THE TRIBUNALS ORDER CONTAINING T HE DIRECTIONS. THE GIST OF THE DIRECTIONS IS SIMPLY THAT IT WAS FO R THE ASSESSEE TO ESTABLISH WITH EVIDENCE THAT THE SERVICES RENDERED BY IT FALL WITHIN THE PARAMETERS OF SECTION 80-O. THE ASSESSEE WAS GIVEN AN OPPORTUNITY TO ADDUCE THE NECESSARY MATERIAL OR EVIDENCE BEFORE THE ASSESSING OFFICER, WHO WAS DIRECTED TO C ONSIDER THEM AND TAKE A FRESH DECISION IN ACCORDANCE WITH LAW. WHATEVER HAS HAPPENED BEFORE THE PASSING OF THE ORDER OF THE TRI BUNAL LOSES ITS RELEVANCE AND HAS NO IMPACT ON THE PRESENT PROC EEDINGS. NEITHER THE ASSESSEE NOR THE ASSESSING OFFICER IS E NTITLED TO TAKE ADVANTAGE OF THE FINDINGS OF THE DEPARTMENTAL AUTHO RITIES IN THE EARLIER PROCEEDINGS. THE ONLY QUESTION THAT CAN BE EXAMINED IS WHETHER THE ASSESSEE HAS SUCCESSFULLY ESTABLISHED B EFORE THE ASSESSING OFFICER BY ADDUCING NECESSARY MATERIAL AN D EVIDENCE THAT THE SERVICES RENDERED BY IT FELL WITHIN THE PA RAMETERS OF SECTION 80-O. ON THIS ASPECT, THERE IS PRECIOUS LI TTLE EVIDENCE WHICH THE ASSESSEE SEEMS TO HAVE ADDUCED BEFORE THE ASSESSING OFFICER IN THE FRESH ROUND OF PROCEEDINGS TAKEN TO GIVE EFFECT TO ITA NO.2274/M/09 9 THE TRIBUNALS DIRECTIONS. IN PARAGRAPH 10 OF THE A SSESSMENT ORDER DATED 14.11.2007, THE ASSESSING OFFICER HAS S TATED THAT APART FROM SUBMITTING THE TERMS OF THE AGREEMENT, W HICH WERE EARLIER SUBMITTED BEFORE THE INCOME-TAX AUTHORITIES , NOTHING-ELSE WAS PRODUCED TO SUBSTANTIATE THE CLAIM FOR DEDUCTIO N. THE ASSESSING OFFICER FOUND NOTHING IN THE CONTRACT TO SHOW THAT THE ASSESSEE SUPPLIED ANY INFORMATION FOR USE BY THE FO REIGN IMPORTER. WHEN THE ASSESSEE HAS NOT COMPLIED WITH T HE DIRECTIONS OF THE TRIBUNAL, IT IS NOT POSSIBLE FOR US TO FIND FAULT WITH THE ASSESSING OFFICER FOR NOT ALLOWING THE CLA IM. 10. THE CIT(A) APPEARS TO HAVE BEEN SWAYED BY WHAT HE CALLS THE CONTRADICTORY STAND TAKEN BY THE ASSESSING OFFI CER. HE HAS OBSERVED THAT ON THE SAME SET OF FACTS, THE ASSESSE E CANNOT BE DENIED BOTH THE DEDUCTIONS UNDER SECTION 80HHC AN D SECTION 80-O AND THAT THE RECEIPT OF RS.65,96,604/-, IF IT DOES NOT FORM PART OF THE EXPORT PROFITS FOR THE PURPOSE OF SECTI ON 80HHC, IT SHOULD REPRESENT INCOME THAT IS ELIGIBLE FOR THE DE DUCTION UNDER SECTION 80-O. WE ARE UNABLE TO SUBSCRIBE TO THIS VI EW TAKEN BY THE CIT(A). SECTION 80-O IS NOT IN ANY WAY RELATED TO SECTION 80HHC. UNDER THIS SECTION (80-O), IF THE ASSESSEE I S IN RECEIPT OF ANY INCOME AS CONSIDERATION FOR USE OUTSIDE INDIA O F ANY PATENT, INVENTION, MODEL, DESIGN, SECRET FORMULA OR PROCESS , OR SIMILAR PROPERTY RIGHT OR INFORMATION CONCERNING INDUSTRIAL , COMMERCIAL OR SCIENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL MADE A VAILABLE OR PROVIDED TO THE FOREIGN ENTERPRISE BY THE ASSESSEE OR IN CONSIDERATION OF TECHNICAL OR PROFESSIONAL SERVICES RENDERED TO THE ENTERPRISE BY THE ASSESSEE, THE ASSESSEE WOULD BE ENTITLED TO A DEDUCTION OF 50% OF THE INCOME SO RECEIVED IN IND IA. IN CIRCULAR NO.72 DATED 6 TH JANUARY, 1972, ISSUED BY THE CBDT, TO EXPLAIN THE AMENDMENTS MADE BY THE FINANCE (NO.2) A CT, 1971, IT HAS BEEN STATED IN PARAGRAPH 60 THAT THE OBJECTI VE OF THIS PROVISION IS TO ENCOURAGE INDIAN COMPANIES TO DEVEL OP TECHNICAL ITA NO.2274/M/09 10 KNOW-HOW AND MAKE IT AVAILABLE TO FOREIGN COMPANIES SO AS TO AUGMENT OUR FOREIGN EXCHANGE EARNINGS AND ESTABLISH A REPUTATION FOR INDIAN TECHNICAL KNOW-HOW IN FOREIGN COUNTRIES. THE CIT(A) WHILE EXAMINING THE QUESTION WHETHER ANY TECHNICAL OR PROFESSIONAL SERVICES WERE RENDERED BY THE ASSES SEE HAS CONSIDERED THE SERVICES RENDERED BY THE ASSESSEE IN CONNECTION WITH THE EXPORT OF NESCAFE TO M/S.BELCOM AS SERVICE S QUALIFYING FOR THE DEDUCTION UNDER THE SECTION. WE ARE UNABLE TO AGREE WITH THE CIT(A) THAT SUCH SERVICES CONSTITUTE ELIGI BLE SERVICES. WE HAVE ALREADY EXTRACTED THE TYPE OF SERVICES WHIC H THE CIT(A) HAS CONSIDERED AS QUALIFYING FOR THE DEDUCTION. TH E ASSESSEE IS A TRADER-EXPORTER. IT HAD ENTERED INTO A CONTRACT W ITH M/S. BELCOM FOR EXPORT OF CERTAIN GOODS. HOWEVER, IN THE CASE OF NESCAFE COFFEE, SINCE THE ASSESSEE COULD NOT FULFIL THE DEMAND OF THE IMPORTER, IT ENTERED INTO AN AGREEMENT WITH NES TLE INDIA LTD. UNDER WHICH NESTLE INDIA LTD. WAS TO EXPORT THE NES CAFE TO M/S.BELCOM AND THE ASSESSEE WAS TO RECEIVE 10% OF T HE SALE PROCEEDS FROM THE FOREIGN ENTERPRISE. THE CONTRAC TS BETWEEN THE ASSESSEE & BELCOM AND THE ASSESSEE & NESTLE IN DIA LTD. HAVE BEEN COMPILED IN THE PAPER BOOK AND WE HAVE PE RUSED THE SAME. IT SEEMS TO US ON A PERUSAL OF THE CONTRACT T HAT THE ASSESSEE DID NOTHING OTHER THAN WHAT AN EXPORTER OF GOODS TO FOREIGN COUNTRIES WOULD DO AND NONE OF THE SERVICES LISTED IN THE AGREEMENT WITH BELCOM FALLS WITHIN THE DESCRIPTION OF SERVICES UNDER SECTION 80-O, AS IT STOOD AT THE RELEVANT TIM E. WHAT THE ASSESSEE RECEIVED WAS NOT CONSIDERATION FOR THE USE OUTSIDE INDIA OF ANY PATENT, INVENTION, MODEL ETC. NOR WAS IT FOR INFORMATION CONCERNING INDUSTRIAL, COMMERCIAL OR SC IENTIFIC KNOWLEDGE, EXPERIENCE OR SKILL MADE AVAILABLE BY TH E ASSESSEE TO THE FOREIGN ENTERPRISE. THERE WAS NO RENDERING OF T ECHNICAL OR PROFESSIONAL SERVICES BY THE ASSESSEE TO BELCOM. T HE SERVICES CONTEMPLATED IN THE AGREEMENT WITH BELCOM ARE SERVI CES WHICH ARE INCIDENTAL TO THE EXPORT OF GOODS. NONE OF THES E SERVICES FALL ITA NO.2274/M/09 11 WITHIN THE PARAMETERS OF SECTION 80-O, AS THE ASS ESSING OFFICER HAS FOUND. THIS IS A SIMPLE CASE OF THE ASSESSEE EX PORTING GOODS TO A FOREIGN ENTERPRISE, BY ARRANGING THE EXPORTS T HROUGH THE MANUFACTURER OF THE GOODS UNDER AN AGREEMENT WHICH IS MORE IN THE NATURE OF A JOINT VENTURE AGREEMENT. THE AMOUNT RECEIVED BY THE ASSESSEE IS ONLY AS CONSIDERATION FOR ITS EFFOR TS AND SERVICES RENDERED IN CONNECTION WITH THE TRADING EXPORTS AND ARE PROFITS ARISING FROM THE TRANSACTION. THE INCOME CANNOT IN ANY WAY BE CONSIDERED AS CONSIDERATION FOR THE TYPE OF SERVICE S CONTEMPLATED BY SECTION 80-O. THE ASSESSEE NEVER RE NDERED ANY OF THOSE SERVICES WHICH FIND MENTION IN THE SECTION AS IT STOOD AT THE MATERIAL TIME. THE ASSESSING OFFICER HAS THERE FORE RIGHTLY REJECTED THE ASSESSEES CLAIM. THE CIT(A) WAS NOT J USTIFIED IN ALLOWING THE ASSESSEES CLAIM. WE ACCORDINGLY RESTO RE THE ORDER OF THE ASSESSING OFFICER ON THE ISSUE OF SECTION 80 -O AND ALLOW THE APPEAL OF THE REVENUE. THERE IS NO ORDER AS TO COSTS. ORDER PRONOUNCED ON THIS 2 6 TH DAY OF MARCH, 2010. SD/- ( P.M. JAGTAP ) SD/- ( R.V.EASWAR ) ACCOUNTANT MEMBER SENIOR VICE PRESIDENT MUMBAI, DATED 26 TH MARCH , 2010. SOMU COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-19, MUMBAI. 4. THE CIT(A)-XIX, MUMBAI 5. THE DR C BENCH /TRUE COPY/ BY ORDE R ASSTT. REGISTRAR, I.T.A.T, MUMBAI