P.A. CHACKO MUTHALALY, MUMBAI V. ACIT 21(1), MUMBAI

ITA 6242/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 8287 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 15-02-2011
• Assessment Year: 2002-2003
• Appeal Filed On: 03-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R N VASANI
• Keywords: Services rendered outside India; Question of law; Competent authority

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI T. R. SOOD, AM I.T.A. NO.: 6242/MUM/2009 ASSESSMENT YEAR : 2002-03 & I.T.A. NO.: 6243/MUM/2009 ASSESSMENT YEAR : 2004-05 M/S. P.A. CHACKO MUTHALALY B-702, PRIME AVENUE, S.V. ROAD, VILE PARLE (W), MUMBAI-400 056 PAN NO: AABPM8652M ACIT 21(1) C-10, PRAYTKSHKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA, MUMBAI (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI R.N. VASANI RESPONDENT BY : SHRI NEERAJ BANSAL ORDER PER T.R. SOOD (AM) : THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 18.09.2009 OF COMMISSIONER OF INCOME TAX (APP EALS)-32, MUMBAI AND RELATES TO THE ASSESSMENT YEARS 2002-03 AND 200 4-05. 2. IN BOTH THESE APPEALS IDENTICAL GROUNDS HAVE BEE N RAISED THROUGH WHICH THE FOLLOWING TWO DISPUTES HAVE BEEN RAISED:- 1. CONFIRMATION OF THE REJECTION OF THE CLAIM OF D EDUCTION U/S.80RRA OF RS.8,48,155/-. 2. REJECTION OF THE ALTERNATE CLAIM OF DEDUCTIONS U/S.80(O). 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT ASS ESSEE WHO IS AN ELECTRONIC ENGINEER AND EXPERT IN LAZER TECHNOLOGY HAS RENDERED SOME TECHNICAL SERVICES TO THE FOREIGN PARTIES AND CLAIM ED DEDUCTION U/S.80 RRA. 2 THE DEDUCTION WAS DENIED BY THE AO BECAUSE ASSESSEE HAD NOT FULFILLED THE CONDITION AS PER SECTION 80 RRA, SUB SECTION (2), C LAUSE (II). 4. THE ASSESSEE HAD ALSO CLAIMED ALTERNATE DEDUCTIO N U/S.80-O. THIS WAS ALSO DENIED BECAUSE THE SERVICES PROVIDED BY AS SESSEE DID NOT FALL IN THE CATEGORIES OF PATENT, INVENTION, DESIGN OR REGISTER ED TRADE-MARK AS ENVISAGED BY SECTION 80-O. 5. ON APPEAL, THE LEARNED CIT (APPEALS) OBSERVED TH AT IN EARLIER YEARS QUESTION OF DEDUCTION U/S.80-O WAS SET ASIDE BY THE TRIBUNAL AND, THEREFORE, THE SAME WAS OPEN AND HE MADE DETAILED E XAMINATION OF THE SAME. IN RESPECT OF CLAIM FOR DEDUCTION U/S.80 RRA IT WAS OBSERVED THAT SINCE THERE WAS A REQUIREMENT FOR APPROVAL OF THE T ERMS AND CONDITIONS OF SERVICES PROVIDED OUTSIDE INDIA, AND SINCE NO SUCH APPROVAL WAS GRANTED, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION U/S.80 RRA IN RESPECT OF DEDUCTION U/S. 80-O. HE DECIDED THE ISSUE AGAINST T HE ASSESEE VIDE PARA 5.7 TO 5.9 OF CIT(APPEALS) ORDER WHICH IS AS UNDER :- 5.7 IF WE READ SEC.80-O IN CONTRADISTINCTION TO SE C. 80RRA, IT IS APPARENT THAT DEDUCTION U/S.80-O IS NOT AVAILABLE T O JUST ANY TECHNICIAN. THE HEADING OF SEC.80-O IS DEDUCTION I N RESPECT OF ROYALTIES, ETC., FROM CERTAIN FOREIGN ENTERPRISES AS AGAINST HEADING IN THE CASE OF SEC.80RRA WHICH IS DEDUCTION IN RESPEC T OF REMUNERATION RECEIVED FOR SERVICES RENDERED OUTSIDE INDIA. 5.8 FROM THE PLAIN READING OF THE RESPECTIVE SECTIO NS, IT IS CLEAR THAT DEDUCTION U/S.80 O IS ONLY IN RESPECT OF ROYALTY AN D SUCH ROYALTIES ARE RECEIVABLE IN RESPECT OF PATENT, INVENTION, DESIGN OR REGISTERED TRADE- MARK. THE TAX INCENTIVE U/S.80-O IS CONTEMPLATED TO ENCOURAGE THE EXPORT OF INDIAN KNOW-HOW AND SKILLS ABROAD. THIS I NCENTIVE WAS TO ENCOURAGE THEM TO EXPLOIT THEIR PATENT RIGHTS, TRAD EMARK AND TECHNICAL KNOW-HOW ABROAD. IT IS NOT MEANT MERELY TO SELL THE IR TECHNIQUE AS TECHNICAL KNOW-HOW, WHICH IS THE CASE FOR AVAILING DEDUCTION U/S.80RRA. IN OTHER WORDS, DEDUCTION U/S.80-O IS AV AILABLE FOR EXPORT OF MUCH HIGHER SKILLS WHICH CAN QUALITY AS A DESIGN OR EVEN BETTER AN INVENTION, OR THEY SHOULD BE CAPABLE OF BEING PATE NTED OR REGISTERED AS TRADE-MARKS. IT IS NOT AVAILABLE FOR ORDINARY EXPOR T OF SKILLS. 5.9 HAVING SAID SO, IT IS NOW IMPORTANT TO EXAMINE THE OPERATIONS OF THE APPELLANT TO DETERMINE WHETHER THESE WOULD FALL WITHIN THE STRUCTURE PROVIDED FOR CLAIMING THE DEDUCTION /S.80-O. WHEN T HE LD. AR OF THE APPELLANT WAS ASKED TO GIVE THE DETAILS OF ACTIVITI ES OF THE APPELLANT IT 3 WAS STATED THAT THE APPELLANT IS AN INDIVIDUAL WHO IS A QUALIFIED ELECTRONICS ENGINEER SPECIALIZING IN LASER TECHNOLO GY. AS PER THE APPELLANTS OWN ADMISSION GIVEN IN THE STATEMENT OF FACTS FILED ALONG WITH THE APPEAL, THE APPELLANT HAS BEEN RENDERING T ECHNICAL SERVICE TO HIS LOCAL AS WELL AS FOREIGN ENTERPRISES. THE APPEL LANT CLAIMS TO HAVE RECEIVED REMUNERATION FROM FOREIGN ENTERPRISES IN L IEU OF TECHNICAL SERVICES FOR INNOVATIVE IDEAS GIVEN TO HIS CUSTOMER S. WHEN THE LD. AR WAS PROBED FURTHER TO NOTE THE EXACT NATURE OF THE ACTIVITY, MY ATTENTION WAS DRAWN TO PAGE 15 OF THE PAPER BOOK WHICH IS COP Y OF AN INVOICE NO.LAS/10810, WHICH DESCRIBES THE RECEIPT OF US$ 45 50 AS CHARGES FOR TECHNICAL CONSULTANCY IN SOFTWARE, HARDWARE, LA SER OPTICS AND OTHER RELATED DEVELOPMENT WORK. 6. BEFORE US THE LEARNED COUNSEL OF THE ASSESEE SUB MITTED THAT APPROVAL WAS REFUSED MAINLY BECAUSE ASSESSEE HAD NOT TRAVELL ED OUTSIDE INDIA. THEN HE REFERRED TO THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF TARU JETHMAL LALVANI VS. SECRETARY, MINISTRY OF FINANCE [1990] 185 ITR 0418, WHEREIN IT WAS OBSERVED THAT THERE WAS NO CONDITION FOR TRAVELLING ABROAD AND, THEREFORE, ASSESSEE WAS ENTITLE TO DEDUCTION U /S. 80RRA. 7. IN ANY CASE, IN THE ALTERNATIVE ASSESSEE WAS ENT ITLED FOR DEDUCTION U/S.80 O BECAUSE ASSESSEE WAS A QUALIFIED ENGINEER AND AN EXPERT IN LASER TECHNOLOGY AND HAD PROVIDED FOLLOWING SERVICES:- 1. TROPICALLISING OF ELECTRONIC CIRCUITRY. 2. DEVELOPED SOFTWARE WHICH LED TO CONTROLLING LOSS OF MATERIAL, ESPECIALLY BECAUSE THE RAW MATERIALS USED WERE DIAM ONDS. 3. BY APPLYING NEW IDEAS AND SUBSEQUENT IMPLEMENTATION OF OPTICAL CHANGES WHICH LED TO NARROWING DOWN THE LASER BEAM. 4. HE MADE DRASTIC CHANGES IN THE TECHNOLOGY IN COLLIN G OF LASERS WHICH HELPED IN SAVING A LOT OF ELECTRIC POWER CONS UMED BY THE LASER MACHINES. 5. HE RE-ROUTED THE ELECTRIC CONNECTIONS INTO THREE AR EAS OF IMPORTANCE AND USED LOW POWER UP SEC TO PROTECT THE EQUIPMENTS AND SAVED A LOT IN MAINTENANCE COST. 8. HE SUBMITTED THAT EVEN WHEN A DESIGN WAS SUPPLIE D, THE SAME WAS HELD TO BE ELIGIBLE FOR DEDUCTION U/S.80-O. IN THIS REGARD, HE REFEREED TO HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. CHARLE S M. CORREA [2010] 323 ITR 174, WHEREIN DEDUCTION U/S.80-O WAS HELD TO BE LIABLE EVEN TO AS ARCHITECTURE FOR PROVIDING TECHNICAL SERVICES. SIMI LARLY, DEDUCTION WAS HELD TO BE LIABLE BY CHENNAI BENCH OF THE TRIBUNAL IN CA SE OF ONTRACK SSTEMS 4 LTD. VS. ACIT [2007] 108 ITD 279, WHERE ASSESSEE WA S A COMPUTER ENGINEER AND HAD APPROVAL OF SERVICES FOR DESIGNING WEB SIDE S. 9. ON THE OTHER HAND, LEARNED DR SUBMITTED THAT AS PER PAGE 1 AND 2 OF THE PAPER BOOK ASSESSEES APPLICATION FOR APPROVAL OF TERMS AND CONDITIONS OF THE SERVICES FOR THE PURPOSE OF THE NAME U/S. 80 RRA HAS ALREADY BEING REJECTED BY GOVERNMENT OF INDIA. AS PER CLAUSE (II) , SUB SECTION (2) THERE IS SPECIFIC REQUIREMENT THAT SUCH SERVICES SHOULD BE A PPROVED AND IN THE ABSENCE OF APPROVAL DEDUCTION U/S.80 RRA HAS BEEN R IGHTLY DENIED BY THE LEARNED CIT (APPEALS). HE FURTHER REFERRED TO SECTI ON 80-O AND SUBMITTED THAT THE PROVISION FOR DEDUCTION ENVISAGED IS IN TH E NATURE OF ROYALTY OR WHERE ASSESSEE IS OWNER OF SOME KIND OF INTELLECTUA L PROPERTY, WHEREAS ASSESSEE HAS ONLY GIVEN SOFTWARE AND OTHER TECHNICA L SERVICES AS MENTIONED IN PARA 5.9 OF THE LEARNED CIT (APPEALS) ORDER. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSION CAREFUL LY. AS FAR AS THE CLAIM OF DEDUCTION 80 RRA IS CONCERNED THE RELEVANT PORTI ONS OF THE SECTION READS AS UNDER:- 80RRA (1) WHERE THE GROSS TOTAL INCOME OF AN INDIV IDUAL WHO IS A CITIZEN OF INDIA INCLUDES ANY REMUNERATION RECEIVED BY HIM IN FOREIGN CURRENCY FROM ANY EMPLOYER (BEING A FOREIGN EMPLOYE R OR AN INDIAN CONCERN) FOR ANY SERVICE RENDERED BY HIM OUTSIDE IN DIA, THERE SHALL, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF TH IS SECTION, BE ALLOWED, IN COMPUTING THE TOTAL INCOME OF THE INDIV IDUAL, [A DEDUCTION FROM SUCH REMUNERATION OF AN AMOUNT EQUAL TO (I) SIXTY PER CENT OF SUCH REMUNERATION FOR AN ASSESSME NT YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2001: (II) FORTY-FIVE PER CENT OF SUCH REMUNERATION FOR AN ASS ESSMENT YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2002. (III) THIRTY PER CENT OF SUCH REMUNERATION FOR AN ASSESSM ENT YEAR BEGINNING ON THE 1 ST DAY OF APRIL,2003. (IV) FIFTEEN PER CENT OF SUCH REMUNERATION FOR AN ASSESS MENT YEAR BEGINNING ON THE 1 ST DAY OF APRIL,2004. AS IS BROUGHT INTO INDIA BY, OR ON BEHALF OF, THE A SSESSEE IN CONVERTIBLE FOREIGN EXCHANGE WITHIN A PERIOD OF SIX MONTHS FROM THE END OF THE PREVIOUS YEAR OR WITHIN SUCH FURTHER PERIOD AS THE COMPETENT AUTHORITY MAY ALLOW IN THIS BEHALF AND NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF THE ASSESSMENT YEAR BEGINNING ON THE 1 ST DAY OF APRIL, 2005 AND ANY SUBSEQUENT ASSESSMENT YEAR]: 5 (2) THE DEDUCTION UNDER THIS SECTION SHALL BE ALLOWED- (3) (I) IN THE CASE OF AN INDIVIDUAL WHO IS OR WAS, IMM EDIATELY BEFORE UNDERTAKING SUCH SERVICE IN THE EMPLOYMENT O F THE CENTRAL GOVERNMENT OR ANY STATE GOVERNMENT, ONLY IF SUCH SE RVICE IS SPONSORED BY THE CENTRAL GOVERNMENT; (II) IN THE CASE OF ANY OTHER INDIVIDUAL, ONLY IF HE IS A TECHNICIAN AND THE TERMS AND CONDITIONS OF HIS SERV ICE OUTSIDE INDIA ARE APPROVED IN THIS BEHALF BY THE CENTRAL GO VERNMENT OR THE PRESCRIBED AUTHORITY. THUS IT IS CLEAR THAT AS PER CLAUSE (II), SUB SECTI ON (2) IN CASE OF AN ASSESSEE WHO WAS NOT AN EMPLOYEE OF CENTRAL GOVERNMENT OR ST ATE GOVERNMENT, THEN HIS TECHNICAL SERVICES HAS TO BE APPROVED BY THE CE NTRAL GOVERNMENT. ADMITTEDLY SUCH SERVICE WHERE NOT APPROVED AND THIS FACT FURTHER BECOME CLEAR FROM THE LETTER DATED 07.06.2005 ISSUED BY MI NISTER OF FINANCE, DEPARTMENT OF REVENUE, CENTRAL BOARD OF DIRECT TAXE S, THROUGH WHICH APPROVAL WAS REFUSED. 11. THE CONTENTION OF THE LEARNED COUNSEL OF THE AS SESSEE IS THAT SUCH REFUSAL WAS MADE BECAUSE ASSESSEE HAD NOT TRAVELLED ABROAD AND HONBLE BOMBAY HIGH COURT HAD ALREADY HELD THAT NO SUCH FOR EIGN TRAVEL IS REQUIRED FOR THE PURPOSE OF DEDUCTION U/S.80 RRA, SOUNDS ATT RACTED. THE CAREFUL PURSUANCE OF THIS JUDGEMENT SHOWS THAT INCASE OF TA RU JETHMAL LALVANI VS. SECRETARY, MINISTRY OF FINANCE (SUPRA), THE ASSESSE E HAD MOVED THE HONBLE BOMBAY HIGH COURT BY WAY OF WRIT PETITION AGAINST T HE REFUSAL OF GRANT OF PERMISSION OF THE SERVICES AND HONBLE BOMBAY HIGH COURT HAD QUASHED THE REFUSAL. THIS COULD BE DONE BECAUSE HONBLE HIGH CO URT HAS WRIT JURISDICTION AND TRIBUNAL HAS NO SUCH POWER TO INTERFERE IN THE ADMINISTRATIVE ACTIONS TAKEN BY THE CENTRAL BOARD OF DIRECT TAXES. IF THE APPROVALS OF THE TECHNICAL SERVICES HAVE NOT BEEN GRANTED, OBVIOUSLY THEN ASSE SSEE IS NOT ENTITLED FOR DEDUCTION U/S.80RRA. THE TRIBUNAL CANNOT GO BEYOND ITS SCOPE TO HOLD THAT CBDT WAS NOT CORRECT IN REFUSING THE PERMISSION FOR WHICH ASSESSEE COULD HAVE TAKEN APPROPRIATE STEPS BEFORE THE HONBLE HIG H COURT. IN THE LIGHT OF THIS DISCUSSION WE ARE OF THE VIEW THAT ASSESSEE IS NOT ENTITLE FOR DEDUCTION U/S.80 RRA. 12. AS FAR AS DEDUCTION U/S.80 O IS CONCERNED IT READS AS UNDER:- 6 DEDUCTION IN RESPECT OF ROYALTIES, ETC. FROM CERTAI N FOREIGN ENTERPRISES. 80-O [WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE, BEING AN INDIAN COMPANY [OR A PERSON (OTHER THAN A COMPANY) WHO IS RESIDENT IN INDIA]], INCLUDES [ANY INCOME RECEIVED BY THE ASSESSEE FROM THE GOVERNMENT OF A FOREIGN STATE OR FOREIGN ENTERPRISE IN CONSIDERAT ION FOR THE USE OUSTSIDE INDIA OF ANY PATENT, INVENTION, DESIGN OR REGISTERED TRADE MARK] [AND SUCH INCOME IS RECEIVED IN CONVERTIBLE FOREIGN EXCHANGE IN INDIA, OR HAVING BEEN RECEIVED IN CONVERTIBLE FOREIGN EXCHANG E OUTSIDE INDIA, OR HAVING BEEN CONVERTED INTO CONVERTIBLE FOREIGN EXCH ANGE OUTSIDE INDIA, IS BROUGHT INTO INDIA, BY OR ON BEHALF OF THE ASSES SEE IN ACCORDANCE WITH ANY LAW FOR THE TIME BEING IN FORCE FOR REGULATING PAYMENTS AND DEALINGS IN FOREIGN EXCHANGE, THERE SHALL BE ALLOWE D, IN ACCORDANCE WITH AND SUBJECT TO THE PROVISIONS OF THIS SECTION, [A DEDUCTION OF AN AMOUNT EQUAL TO FROM THE ABOVE IT BECOMES CLEAR THAT UNLESS AND UNT IL SOME KIND OF INTELLECTUAL PROPERTY HAS BEEN USED, THIS DEDUCTION IS NOT AVAILABLE. THIS CONCEPT FURTHER BECOMES CLEAR FROM THE DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF CIT VS. CHARLES M. CORREA (SUPRA), THE FOLLOWING PARAS ARE RELEVANT :- THE ISSUE BEFORE THE COURT IS AS TO WHETHER THE AS SESSEE HAD FULFILLED THE CONDITIONS SPECIFIED IN SECTION 80-O. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR IN QUESTION, T HE ASSESSEE HAD TWO CONTRACTS THE FIRST RELATING TO THE DEVELOPMENT O F A NEW BRAIN AND COGNITIVE CENTRE FOR MASSACHUSETTS INSTITUTE OF TEC HNOLOGY AND THE SECOND IN RESPECT OF THE ISMAILI CENTRE, TORONTO. U NDER THE FIRST CONTRACT IN WHICH THE ASSESSEE WAS DESCRIBED AS AN ASSOCIATE ARCHITECT, THE ASSESSEE HAD TO PROVIDE ARCHITECTURAL AND DESIGN SE RVICES PRIMARILY IN SCHEMATIC AND DESIGN DEVELOPMENT PHASES. UNDER THE SECOND CONTRACT WHERE THE ASSESSEE WAS DESCRIBED AS A CONSULTANT, T HE ASSESSEE WAS REQUIRED TO ASSIST THE ARCHITECT WITH THE DESIGN FO R THE CONSTRUCTION OF THE PROJECT. IN THE PRESENT CASE, AS THE FACTS BEFO RE THE COURT WOULD SHOW THAT IT HAS NOT BEEN DISPUTED THAT THE ASSESSE E DID AS A MATTER OF FACT PROVIDE THE DESIGNS. NOR IS IT DISPUTED THAT T HE DESIGNS PROVIDED BY THE ASSESSEE WERE USED OUTSIDE INDIA. MOREOVER, IT IS AN ADMITTED POSITION THAT INCOME IN CONVERTIBLE FOREIGN EXCHANG E WAS RECEIVED BY THE ASSESSEE IN INDIA. SECTION 80-O, INTER ALIA, CONTAINS THE FOLLOWING REQUIREMENTS : (I) THE GROSS TOTAL INCOME OF THE ASSESSEE, BEING AN IN DIAN COMPANY OR A PERSON RESIDENT IN INDIA MUST INCLUDE ANY INCOME RE CEIVED BY THE ASSESSEE FROM THE GOVERNMENT OF A FOREIGN STATE OR A FOREIGN ENTERPRISE ; (II) THE INCOME MUST BE RECEIVED IN CONSIDERATION OF THE USE OUTSIDE INDIA OF ANY PATENT, INVENTION, DESIGN OR REGISTERE D TRADEMARK; AND (III) SUCH INCOME MUST BE RECEIVED IN CONSIDERATION OF TH E USE OUTSIDE INDIA OF ANY PATENT, INVENTION, DESIGN OR REGISTERED TRAD EMARK; AND (III) SUCH 7 INCOME MUST BE RECEIVED IN CONVERTIBLE FOREIGN EXCH ANGE IN INDIA OR HAVING BEEN RECEIVED IN CONVERTIBLE FOREIGN EXCHANG E OUTSIDE INDIA MUST BE BROUGHT INTO INDIA, BY OR ON BEHALF OF THE ASSES SEE, IN ACCORDANCE WITH ANY LAW FOR THE TIME BEING IN FORCE REGULATING PAYMENTS AND DEALINGS IN FOREIGN EXCHANGE. THE DEDUCTION THAT IS ALLOWED IS IN TERMS OF THE PROVISIONS OF SECTION 80-O, AND VARIES FROM THE QUESTION OF LAW THAT HAS BEEN FRAMED BY THE REVENUE, IT APPEARS THAT THE CONTENTION IS THAT THE ASSESSEE WA S PROVIDING PROFESSIONAL SERVICES AND COULD NOT BE REGARDED AS THE OWNER OF INTELLECTUAL PROPERTY. THERE IS NO MERIT IN THE SUB MISSION. THE INCOME IN RESPECT OF WHICH A DEDUCTION IS CLAIMED UNDER SECTI ON 80-O WAS NOT INCOME, GENERALLY SPEAKING RECEIVED FOR RENDERING P ROFESSIONAL SERVICES OUTSIDE INDIA. THE INCOME WHICH WAS RECEIVED WAS SP ECIFICALLY IN CONSIDERATION FOR USE OUTSIDE INDIA OF THE DESIGNS WHICH WERE SUPPLIED BY THE ASSESSEE. FOR THE PURPOSES OF SECTION 80-O, USE THAT IS MADE OUTSIDE INDIA MAY BE SINGLE OR MULTIPLE USE, WHICH MAY VARY UPON THE FACTS AND CIRCUMSTANCES OF EACH CASE. SO LONG AS TH E USE HAS TAKEN PLACE OUTSIDE INDIA AND THE PAYMENT WHICH IS RECEIV ED IN CONVERTIBLE FOREIGN EXCHANGE INS IN INDIA FOR THE USE OF INTELL ECTUAL PROPERTY OF THE STATED DESCRIPTION OUTSIDE INDIA, THE BENEFIT OF TH E DEDUCTION WOULD HAVE TO BE GRANTED. THE ASSESSEE HAD PREPARED DESIG NS IN INDIA AND HAD SUPPLIED THEM TO ITS FOREIGN COUNTERPART OUTSID E INDIA IN PURSUANCE OF THE CONTRACTS NOTED EARLIER. EXPLANATION (III) T O SECTION 80-O CLARIFIES THAT SERVICES RENDERED OR AGREED TO BE RENDERED OUT SIDE INDIA, WOULD INCLUDE SERVICES RENDERED FROM INDIA BUT NOT TO INC LUDE SERVICES RENDERED IN INDIA. THERE IS NO DISPUTE ABOUT THE FA CT THAT THE DESIGNS WERE SUPPLIED AND USED OUTSIDE INDIA. ALL THE CONDI TIONS REQUISITE FOR AN EXEMPTION UNDER SECTION 80-O WERE FULFILLED. FROM THE ABOVE IT IS CLEAR THAT EVEN IN CASE OF ARC HITECTURE WHO HAS PROVIDED DESIGNING SERVICES MAY BE ELIGIBLE FOR DEDUCTION U/ S.80-O. 13. IN THE CASE BEFORE US, ASSESSEE HAS NOT SUPPLIE D ANY DESIGN OR NOT USED ANY INTELLECTUAL PROPERTY. THE LEARNED COUNSEL HAD EMPHASISED THAT ASSESSEE HAD PROVIDED TECHNICAL KNOW HOW BUT THERE IS NOTHING ON RECORD TO SHOW THAT ASSESSEE WAS IN POSSESSION OF ANY TECHNIC AL KNOW HOW. NATURE OF SERVICES PROVIDED HAS BEEN NOTED BY THE LEARNED CIT (APPEALS) FROM THE INVOICES WHICH IS AS UNDER :- CHARGES FOR TECHNICAL CONSULTANCY IN SOFTWARE, HAR DWARE, LASER OPTICS AND OTHER RELATED DEVELOPMENT WORK. THIS SHOWS THAT ASSESSEE WAS MERELY PROVIDING TECHN ICAL SERVICES OR SOME KIND OF SOFTWARE FOR WHICH DEDUCTION IS NOT AVAILAB LE U/S.80-O. THEREFORE, IN 8 CASE OF ONTRACK SYSTEMS LTD. (SUPRA) ALSO, THE FACT WAS THAT ASSESSEE HAD PROVIDED SERVICES OF DESIGNING THE WEBSITE THAT IS WHY DEDUCTION WAS HELD TO BE ALLOWABLE. BUT IN THE CASE BEFORE US SERVICES WA S NOT PROVIDED IN DESIGNING TO HIS CUSTOMERS. 14. IN VIEW OF THESE DISCUSSIONS WE ARE OF THE VIEW THAT ASSESSEE IS NOT ENTITLE FOR DEDUCTION U/S.80-O. 15. IN THE RESULT, THE ASSESSEES APPEALS ARE DISMI SSED. ORDER PRONOUNCED ON THIS 4 TH DAY OF MARCH, 2011. SD/- SD/- (D. MANMOHAN) (T. R. SOO D) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DT: 04/03/2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, C - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI