Delhi High Court
Commissioner Of Income Tax vs Inchcape India (P) Ltd. on 2 November, 2004
Equivalent citations: (2005)193CTR(DEL)290, [2005]273ITR92(DELHI)
Author: Badar Durrez Ahmed
Bench: Badar Durrez Ahmed
JUDGMENT B.C. Patel, C.J.
1. This appeal arises out of the order made by the Tribunal in ITA No. 3905/Del/1999 for the asst. yr. 1996-97 decided on 5th June, 2002, relying on the decision of the Tribunal in the case of Dy. CIT v. Mittal Corporation (2001) 73 TTJ (Del) 835 : (2001) 77 ITD 270 (Del).
2. Against the said decision dt. 5th June, 2002, the Revenue preferred appeal under s. 260A of the IT Act, 1961 (hereinafter referred to as "the Act"), and the Court framed the question as under:
"Whether the assessed has fulfillled the conditions as prescribed under s. 80-O of the IT Act, 1961, to be eligible for deduction ?"
3. This question was framed as the decisions rendered by the Tribunal in various appeals were challenged before this Court and, therefore, similar question was framed. At the outset, we may say that the Tribunal relied on the decision in the case of Mittal Corporation (supra) against which the Revenue preferred an appeal which has been decided by this, Court on 1st Nov., 2004, i.e., ITA No. 15 of 2004 titled as CIT v. Mittal Corporation. However, learned counsel for the Revenue submitted that this matter is decided on different aspect and, therefore, it cannot be associated or clubbed with the aforesaid case. Suffice it to say that in the instant case the assessed was providing two types of services, namely, through its dyeing division and testing division. In para 15, the Tribunal after considering the facts has pointed out that the assessed through both these divisions was carrying on the activities which fell within the provisions of s. 80-O of the Act. In the dyeing services division, the information supplied out of India was in respect of research, local suppliers for various products/goods, information on the availability of products, information on market condition, etc. The Tribunal has examined in detail about testing division services and pointed out that it was supplying information regarding testing, inspecting of the fabrics/garments/ consumable goods sourcing from India. Quality assurance service was required to be provided. It was required to Work in the field of textile testing, inspection of soft lines, electrical and electronics products according to the existing standards of European and American markets, etc. The learned counsel for the Revenue submitted that in view of the decision reported in Searle (India) Ltd. v. CBDT and Anr. (1984) 145 ITR 673 (Bom), the assessed is not entitled to get the benefit. In that case, there was an agreement for providing technical services. However, it is required to be noted that learned counsel for the Revenue admitted that this decision is rendered much before the insertion to Expln. (iii) to s. 80-O of the Act, which reads as under:
"Services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India."
4. Again our attention was drawn to the circular issued by the CBDT itself being Circular No. 700, dt. 23rd March, 1995, specifically referring to s. 80-O of the Act. It is stated specifically as under:
"The matter has been considered by the Board. It is clarified that as long as the technical and professional services are rendered from India and are received by a foreign Government or enterprise outside India, deduction under s. 80-O would be available to the person rendering the services even if the foreign recipient of the services utilises the benefit of such services in India."
5. Thus, it is not open for the Revenue to argue against the provision of law and the circular by which the public at large is informed as to what is the provision of law. Therefore, we would like to answer the question in favor of the assessed and against the Revenue. Ordered accordingly. The appeal stands disposed of.