REPORTABLE IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL Nos 2506-2509 OF 2020 (Arising out of SLP (Civil) Nos. 23535 23538 of 2016) RAMNATH & CO. .Appellant (s) Vs. COMMISSIONER OF INCOME TAX .Respondent (s) With Civil Appeal No. 2510 of 2020 @ SLP(C) No. 23699 of 2016 JUDGMENT Dinesh Maheshwari, J. PRELIMINARY WITH BRIEF OUTLINE Leave granted. 2. short point calling for determination in these appeals against common judgment dated 09.06.2016 passed by High Court of Kerala at Ernakulam in batch of appeals is as to whether income received by appellants in foreign exchange, for services provided by them to foreign enterprises, qualifies for deduction under Section 80-O of Income Tax Act, 19611, as applicable during respective assessment Signature Not Verified Digitally signed by DEEPAK SINGH Date: 2020.06.05 years from 1993-94 to 1997-98. 16:29:00 IST Reason: 1 Hereinafter also referred to as Act of 1961 or Act 1 3. Put in nutshell, question involved in these appeals has arisen in backdrop of facts that appellants herein, who had been engaged in providing services to certain foreign buyers of frozen seafood and/or marine products and had received service charges from such foreign buyers/enterprises in foreign exchange, claimed deduction under Section 80-O of Act of 1961, as applicable for relevant assessment year/s. In both these cases, respective Assessing Officer/s 2 denied such claim for deduction essentially with finding that services rendered by respective assessees were services rendered in India and not services rendered from India and, therefore, service charges received by assessees from foreign enterprises did not qualify for deduction in view of clause (iii) of Explanation to Section 80-O of Act of 1961. After different orders from respective Appellate Authorities, Income Tax Appellate Tribunal3, Cochin Bench accepted claim for such deduction under Section 80-O of Act with finding in case of assessee Ramnath & Co.4 for assessment year 1993-94 that as per agreements with referred foreign enterprises, assessee had passed on necessary information which were utilised by foreign enterprises concerned to make decision either to purchase or not to purchase; and hence, it were service rendered from India. same decision was followed by ITAT in case of this assessee for other assessment years under consideration as also in case of other assessee M/s Laxmi 2 AO for short 3 ITAT for short 4 Related with appeal arising out of SLP (Civil) Nos. 23535-23538 of 2016. 2 Agencies5. revenue preferred appeals before High Court against orders so passed by ITAT in favour of present appellants as also few other assessees. These appeals have been considered together by High Court of Kerala; and similar questions regarding eligibility for deduction under Section 80-O of Act in relation to similarly circumstanced assessees have been decided by impugned common judgment dated 09.06.2016. High Court has essentially held that assessees were merely marine product procuring agents for foreign enterprises, without any claim for expertise capable of being used abroad rather than in India and hence, services rendered by them do not qualify as services rendered from India , for purpose of Section 80-O of Act of 1961. Therefore, High Court has allowed appeals of revenue while setting aside respective orders of ITAT. Aggrieved, assessees have preferred these appeals6. 4. basic factual and background aspects relating to two assessees in appeal before us are more or less similar in nature but, having regard to position that ITAT had decided all other appeals based on its order dated 19.11.2001 for assessment year 1993-94 in relation to assessee-appellant Ramnath & Co. and High Court has also rendered common judgment essentially with reference to facts relating to this assessee (with other assessees having adopted same contentions), it 5 Related with appeal arising out of SLP(Civil) No. 23699 of 2016. 6 appeals herein relate to ITA Nos. 132 of 2002, 11 of 2003, 761 of 2009 and 294 of 2009 as also ITA No. 771 of 2009, decided by High Court in common impugned judgment dated 09.06.2016, rendered in batch of appeals led by ITA No. 131 of 2002. 3 appears appropriate to elucidate same facts and background aspects for dealing with questions raised in these appeals. RELEVANT FACTUAL AND BACKGROUND ASPECTS: 5. appellant Ramnath & Co. is firm engaged in business of providing services to foreign buyers of Indian marine products. appellant filed its return of income for assessment year 1993-1994 on 29.10.1993 declaring total taxable income at Rs. 6,21,710/- while claiming 50% deduction (amounting to Rs. 22,39,825/-) under Section 80-O of Act in relation to amount of Rs. 44,79,649/- received by it as service charges from foreign enterprises7. 5.1. While asserting its claim for such deduction under Section 80-O of Act, appellant submitted that it had rendered myriad services to foreign enterprises like: (i) locating reliable source of quality and assured supply of frozen seafood for purpose of import and communicating its expert opinion and advice in that regard; (ii) keeping close liaison with agencies concerned for bacteriological analysis and communicating result of inspection together with expert comments and advice; (iii) making available full and detailed analysis of seafood supply situation and prices; (iv) advising and informing about latest trends in manufacturing and markets; and (v) negotiating and finalising prices for Indian exporters of frozen marines products and communicating such other related information 7 It was noticed by Assessing Officer in assessment order dated 28.03.1996 that assessee had been in business of marine products export since very long time; and until assessment year 1992-93, assessee had been claiming deduction under Section 80HHC of Act of 1961, which provides for deduction in respect of profits derived from export of specified class of goods or merchandise. 4 to foreign enterprises. appellant claimed that pursuant to terms and conditions of agreements with foreign enterprises, it had received said service charges; and its services had directly and indirectly assisted foreign enterprises to organise, develop, regulate and improve their business. 5.2. In regard to such claim for deduction under Section 80-O of Act, AO, by his letter dated 29.01.1996, raised following queries and sought clarifications from appellant:- 1.The location of services rendered by assessee may be mentioned if there are any services rendered outside India. 2. Whether technical/professional services rendered by assessee were utilized by foreign enterprises anywhere in India or outside India independently of assessee. 3. Whether technical/professional services rendered by assessee were utilized by foreign enterprises, in India, independently and without assessee. 4. To clarify whether technical/professional services rendered by assessee are capable or being made use of by foreign enterprises independently and without assessee. 5.3. In response, appellant justified its claim for deduction under Section 80-O of Act by way of its letter dated 19.02.1996 while asserting as under: 1. technical/professional services rendered by us are from India . 2. Foreign buyers to whom we have rendered these services are located in Japan, U.S.A., U.K. and France. None of these foreign enterprises have utilized our services in any part of India. But entire benefit of our services were 5 utilized by them in effectively distributing and marketing Indian sea-foods in their respective countries. 3. We would like to emphasize that foreign enterprises have no place of business in India nor do they market any goods or services in India. 4. Without services import of marine products from India by foreign enterprises will not be possible. 5.4. In his assessment order dated 28.03.1996, Assessing Officer proceeded to analyse agreements of appellant with two foreign enterprises and reproduced relevant terms thereof in extenso. This part of order of AO, containing material terms of agreements, being relevant for present purpose, is reproduced as under: - In context of above claim of assessee, it is necessary to go through agreements entered into by assessee with foreign enterprises to find out nature of relationship of assessee with foreign enterprises. I have gone through agreements entered into by assessee with HOKO Fishingco Ltd. is captioned agreement regarding marine products and that with GELAZURE S.A. is captioned agency agreement regarding marine products. Articles 1 to 4 of agreement with HOKO fishing Co. Ltd. reads as under:- Article 1:HOKO desires to avail of benefit of commercial and technical knowledge experience and skill of RC-CN foods/Marine products of good quality and on favourable terms and is willing to remunerate RC-CN for use of such commercial and technical knowledge, expert and skill and other related services. Article 2: RC-CN agrees to render to HOKO following services on continuing basis. a) Locating reliable sources of quality and assured supply of frozen seafood/marine products for purpose of import by HOK and communicate its expert opinion and advice to HOKO. 6 b) In addition to above services rendered by RC-CN, it will also keep close liaison with agencies such as EIA/LLOYDS/SGS especially for organoleptic/bacteriological analysis and communicate results of inspection along with its expert comment and advise. c) Making available full and detailed analysis of sea food supply situation and prices. d) To advise HOKO and keep them informed of latest trends/processes application in manufacturing and of all valuable commercial and economic information about markets. Government Policies, exchange fluctuations, banking laws which will directly or indirectly assist HOKO to organize, develop control or regulate their import business from India. e) To negotiate and finalize prices for Indian Exporters of frozen marine products and to communicate such and other related information to HOKO. Article 5 RC-CN shall also do everything that is required to ensure highest standards of quality hygiene and freshness of products including supervision at various stages. Article 4: HOKO pays to RC-CN 0.7% of invoice amount on C & F basis and US$ 2,000.00 per month as commission. When quality of goods is found to be unsatisfactory to HOKO after inspection in Japan, HOKO shall have no responsibility to pay agent fee. Similarly, articles 1 to 4 of Agreement with GELAZUR S.A read as under:- Article 1: GELAZUR appoints RAMNATH as agent to operate in priority their purchases in frozen seafood s products in India. Article 2 : RAMNATH does following business as Agent on behalf of GELAZUR. 1)To negotiate with local packers for purchase of frozen seafood products which GELAZUR requires: 2)To give GELAZUR all accurate information in respect of standard, quantity, price, quality, time of shipment, etc. promptly, whenever purchase of products is made 7 3)To carry out technical guidance for processing and for quality control and inspection of products and to advise GELAZURE of results. 4)To inform GELAZURE regularly about market situation, i.e. fishing situation, prices paid by other markets, prices paid by French competitors, business opportunities, monthly supplies of seafood-data. Article 3: After reception of goods, GELAZURE will pay RAMNATH commissions calculated on following basis: -CHAM ICE/Porbandar-Veraval-Bombay: Cephalepods or Fishes : 1.5% of C+F Value Shripps-Lobsters: 0.75% of C+F Value OTHER PACKERS SHRIMPS & LOBSERS : 1% OF C+F value Squids, cuttlefish, Cockies Mussels and other Fishes: USD O.65/Kg When quality and packaging of goods are found to be unsatisfactory to GELAZUR after inspection in FRANCE, GELAZURE, shall have no responsibility regarding payment of Agent s fee. Article 4: If any claim arises out of or in relation to purchases of products for which GELAZUR has no responsibility, RAMNATH will do their best to settle claim through negotiation with manufacturers. settlement of claim will have to be carried out 60 days after reception of goods. 8 5.5. Having examined contents of two agreements, Assessing Officer did not feel convinced with claim that appellant had been rendering services from India so as to qualify for deduction under Explanation (iii) to Section 80-O of Act. Assessing Officer was 8 Note: In papers placed on record, name of this foreign company has been mentioned both as GELAZUR and GELAZURE . We have retained particulars in extractions as stated in respective papers but in our discussion, have referred it as GELAZUR . 8 firmly of view that appellant had worked only as agent of foreign enterprises in matter of procurement of marine products from India; and all services envisaged in agreements were incidental to carrying out of main function as agent. Assessing Officer recorded his observations and findings as follows: - .A close study of articles extracted above, would establish that assessee is merely agent of foreign enterprises in India in matter of procurement of marine products from India. All services which are required to be carried out by assessee in terms of agreements are incidental to carrying out of primary function of acting as agent. assessee s role is to act on behalf of foreign principals within limits allowed by them. In terms of agreements, assessee negotiates with local packers with regard to quality, quantity and price. On behalf of principals, assessee carries out technical guidance for processing and for quality control and also inspection of products and also keeps close liaison with various agencies. These are definitely services rendered in India and cannot be construed as services rendered from India merely relying on facts that foreign principals are advised of results and that they are stationed outside India. It is true that as per agreement, assessee was to supply certain information of general nature regarding markets, government policies, exchange fluctuations, banking laws, prices paid by competitors, monthly supplies of seafood data etc. However, agreements do not envisage any payment of separate in commission or service charge for such information. commission is payable to assessee as percentage of C & F value of imports by foreign enterprises through assessee. However, payment of commission is conditional on foreign enterprises finding quality of goods satisfactory. This would reinforce my earlier observation that assessee is only agent of foreign enterprises in matter of procurement of marine products from India and all services envisaged in agreement are incidental to carrying out of main function as agent. It is also not as if foreign enterprises completely stayed away from India. Though it might be fact that none of foreign enterprises 9 had any office or branch anywhere in India, available information indicates that representatives of foreign enterprises used to visit India in connection with procurement of marine products from various packers in India and it fell upon assessee to take these persons to processing facilities of various suppliers with view to ensure quality and hygiene standards. This is evident from fact that sum of Rs.23,122/- has been incurred by assessee during visit of buyers, representatives to various seafood packers in Calcutta, Bombay vizag, Madras Nandapam, Cochin, Calicut etc. Expenses for souvenirs, compliments and samples of value of Rs.29,411.99 have also been incurred presumably in connection with visit of representatives of foreign buyers. By any stretch of imagination, it cannot be claimed that services rendered on occasions of visit of representatives of foreign enterprises were not rendered in India. foreign travels undertaken by Managing Partner for meeting various buyers can been seen as only extension of assessee s role as agent of foreign enterprises in India. agent of foreign enterprise in India necessarily acts on behalf of foreign enterprise in India, and therefore, services, namely carrying out inspections to ensure quality of products and packaging, supervision of processing, negotiating prices in respect of marine products exported with assistance of assessee, could not have been rendered outside India as parties to be contacted, products to be inspected, processing to supervised etc. were situated in India only. In my view services that are incapable of being rendered outside India will not come under category of services that can be rendered from India. Therefore, there is no merit in contention of assessee that these services were rendered from India but not within India . (emphasis in bold supplied) 5.6. appellant also relied upon Circular No. 700 dated 23.03.1995 issued by Central Board of Direct Taxes 9 in support of its contentions. Assessing Officer distinguished matter dealt with by said Circular from that involved in present case in following passage: - 9 CBDT for short 10 ..The assessee also strongly relies on circular No.700 dated 23/3/95 issued by C.B.D.T. In my view, reliance on above circular by assessee to buttress its case is misplaced. Para 3 & 4 of above circular which are quits relevant, reads as under : - 3. question has been raised as to whether benefit of Section 80-O would be available if technical and professional services, though rendered outside India, are used by foreign government or enterprise in India. 4. matter has been considered by Board. It is clarified that as long as technical and professional services are rendered from India and are received by foreign government or enterprise outside India deduction under Section 80-O would be available to person rendering services even if foreign recipient of services utilizes benefit of such services in India. As is clear from above, C.B.D.T. was dealing with question whether deduction under Section 80-O could be denied on ground that foreign enterprise uses services rendered outside India, in India. It has been clarified that merely because foreign enterprises utilized benefit of services rendered outside India, deduction under Section 80-O cannot be denied. In case before C.B.D.T, there was not dispute as to where technical services were rendered, In case before me, there is absolutely no scope for doubt that services as agent were rendered by assessee in India only. In 132 ITR 637, Bombay High Court held that assessee acting as mere employment recruiting bureau was not entitled for deduction under Section 80-O and services rendered in locating prospective candidates and collecting their bio-datas and conveying names of candidates to foreign employers did not represent services rendered outside India. Similarly, in 145 ITR 673 in case of Searls (India) Ltd, same High Court ruled that testing of samples in India and giving results and certificate to foreign company did represent technical services rendered outside India. In view of forgoing discussion, I would hold that assessee is not entitled for deduction u/s 80-O as services made available to foreign enterprises were rendered in India. 11 5.7. In aforesaid view of matter, AO disallowed claim for deduction under Section 80-O of Act. 5.8. In appeal taken by appellant, Appellate Authority did not agree with opinion of Assessing Officer, particularly with reference to decision of Delhi High Court in case E.P.W. Da Costa and Ors. v. Union of India: (1980) 121 ITR 751 (Delhi) and decision of ITAT Delhi, D Bench in case of Capt. K. C. Saigal v. Income Tax Officer: (1995) 54 ITD 488 (Delhi) and hence, allowed appeal while observing, inter alia, as under: - 14 In present case, there is no dispute that appellant is supplying information with regard to markets, government policies, exchange fluctuations, banking laws, data with regard to monthly supply of sea-food etc. to foreign enterprises. Secondly, even if appellant is mere agent of foreign enterprises, he is bringing foreign enterprises in contact with manufacturers or processors of shrimps, lobsters etc. and negotiating with local packers and is locating sources of frozen sea- foods for foreign enterprises. Though various items of activity are rendered in India, they are done on behalf of foreign enterprises and market and other information had been supplied from India to foreign enterprises. 15. In section 80-O, Explanation (iii) 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 . word from means out of or springing out of . Thus, from India necessarily means that some of activities will spring out of or will be in India because services are rendered from India. In this connection, I am of view that decision of Delhi High Court in E.P.W. De Costa & Another vs. Union of India (121 ITR 751) is really applicable to facts of case. services rendered with regard to 12 assessing radio-listening habits of people were rendered in India i.e. data had been collected in India. However, it was held that mere mass of information without analysis and without being understandable would not be of use to B.B.C. information is not, therefore, mere data but scientific knowledge. In present case, appellant has located reliable source of quality and assured supply of frozen sea-food products to various foreign enterprises at Japan, France and other countries and supplied information with regard to sea-food processing, manufacturing details and also government policies, exchange fluctuations etc. to foreign enterprises. appellant has negotiated and finalised prices for Indian exporters of frozen sea-food products and communicated same to foreign enterprises. Thus, appellant has rendered services from India to these foreign enterprises. That appellant s information and experience have been effectively utilised by foreign enterprises can be seen from fact that export effected by appellant- concern have risen from 20 crores in AY 1991-92 to 100 crores by AY 1996-97. For year under consideration, exports are approximately 60 crores on which appellant has earned commission of Rs. 44.79 lakhs. 16. major issue to be decided in this case is whether services rendered by appellant can be said to be from India . On facts and circumstances of case, I am of opinion that services have been rendered from India and hence, appellant is eligible for deduction u/s 80-O, especially in view of decision of Delhi High Court in E.P.W. De Costa & Another vs. Union of India (121 ITR 751) and I.T.A.T. Delhi D Bench decision in case of Capt. K. C. Saigal vs. I.T.O. (54 ITD 488). (emphasis in bold supplied) 5.9. Aggrieved by decision aforesaid, revenue preferred appeal before ITAT, being ITA No. 84/Coch/1997, that was considered and decided by ITAT by its order dated 19.11.2001. ITAT took note of history of introduction of Chapter VI-A and Section 80-O to Act of 1961 by Finance (No. 2) Act, 1967 as also fact that Section 80-O had undergone several amendments over course of time. ITAT 13 concurred with findings of Appellate Authority that services rendered by appellant, which helped foreign parties to import marine products from India, had been specialised and technical services and thereby, appellant was entitled to claim deduction under Section 80-O of Act. ITAT observed and held, inter alia, as follows: - 9. case of Revenue is that assessee has rendered services only in India and not from India. services that entitle assessee for benefit under Section 80-O should be of such nature that it can only be rendered outside India and not services that are capable of being rendered in India. According to revenue, assessee was rendering only generalised service such as market studies, study of processing, etc. so as to satisfy quality of materials exported, like any other general agent. Therefore, assessee is not entitled to claim benefit under Section 80-O. Considering facts and circumstances of case, we are unable to agree with above proposition. In CBDT v. Oberoi Hotels (India) (P) Ltd. [1998] 231 ITR 148 Supreme Court has held that agreement for managing modern hotel, including promotion of business, recruiting and training staff are all such services that entitle assessee for benefit of Section 80-O . In circular No.700 issued on 23-3-1995 Board clarifies position. It clarifies that as long as technical and professional services are rendered from India and are received by foreign Government or enterprise outside India, deduction under Section 80-O would be available to person rendering services even if foreign recipient of services utilises benefit of such services in India . Now question is whether assessee rendered any service and communicated same to foreign party. Article 2 (4) of agency agreement regarding marine products entered into between Gelazur S.A. and Ramnath & Co. (assessee) states that assessee is to inform GELAZUR regularly about market situation, i.e. fishing situation, prices paid by other markets, prices paid by French Competitors, business opportunities, monthly supplies of seafood data. This indicates that assessee has to communicate data it collected, and on basis of this, foreign party acts either to purchase or not to 14 purchase. It is also true that Article 4 of said agreement states that if, any claim arises out of or in relation to purchase of products for which GELAZUR , has no responsibility, RAMNATH will do their best to settle claim through negotiation with manufacturers . This indicates that party is also doing supply of services. But, this part of service is only consequential to first. agreement entered into between Hoko Fishing Co. Ltd., Tokyo, Japan and assessee also stipulates that assessee has to keep Hoko informed of latest trends/processes applications in manufacturing and of all valuable commercial and economic information about market, Government Policies, exchange fluctuations, banking laws which will directly or indirectly assist Hoko to organise, develop, control or regulate their import business from India. In addition to this, assessee has to render services to ensure highest standards of quality, hygiene and freshness of products including supervision at various stages. second mentioned services may be considered as services rendered in India. But, definitely other services rendered and informed to other party like latest trends/processes applications in manufacturing, commercial and economic, information about markets, Government Policies, exchange fluctuations, banking laws etc. which help foreign party to import marine products from India is specialised and technical service. That, in our view, qualifies assessee to claim deduction under Section 80- O. (emphasis in bold supplied) 5.10. ITAT also referred to subtle distinction in two phrases: services rendered from India and services rendered in India ; and while referring to decision of Bombay High Court in case of Godrej & Boyce Mfg. Co. Ltd. v. S.B. Potnis, Chief Commissioner: (1993) 203 ITR 947 (Bom) as also other decisions, observed that if assessee had not passed on requisite information, export would not have materialised. According to ITAT, if assessee had done services like packing, shipping etc., in that case, assessee would have been merely 15 exporter and could not have claimed benefit under Section 80-O but, services rendered by assessee were of specialised nature, which had been utilised by foreign party. Accordingly, ITAT dismissed appeal of revenue while observing as under:- 10. It is true that difference between services rendered from India and services rendered in India used in Explanation below proviso to section is wafer- thin. But still difference exists when looked from point of view Indian Exporter. services rendered in India are services to make goods eligible for export. On other hand, services rendered from India can be treated as services rendered, as desired by foreign party, which need specialisation. If foreign party is interested in details or information or specific details and such details are supplied by Indian party and such details are utilised either to purchase or not to purchase from India, such services can be treated as services rendered from India . If foreign party seeks any service and it is rendered, it is service rendered from India, whereas services rendered in India are not necessarily by virtue of other party s request or demand. In Godrej & Boyce Mfg. Co. Ltd. vs. S.B. Potnis, Chief Commissioner [1993] 203 ITR 947 Hon ble Bombay High Court held that provision made for giving of all marketing, industrial manufacturing, commercial and scientific knowledge, experience and skill for efficient working and management of foreign company could be treated as services rendered that make assessee eligible for benefit under Section 80-O. 11. In Mittal Corporation s case (supra), Delhi bench-D of Tribunal held that object and spirit of Section 80-O was to mainly encourage Indian technical know-how and skill abroad and since information was given outside India party and it was used outside India and payment was received in convertible foreign exchange, condition required for allowing deduction under Section 80-O could said to have been fulfilled. In case of E.P.W. Da Costa (supra) Delhi High Court has held that if information passed on by assessee is of practical nature and was result of making or manufacturing some concrete thing and such information has been utilised by foreign party, such 16 information is sufficient to claim benefit under Section 80- O. 12. Before parting with, let us think in negative way. If assessee had not passed on information like marketing, processing, quality control, etc. to other party, export would not have materialised. Short of this information, if assessee had done services like packing, shipping, etc. and ensured quality and quantity, assessee is merely exporter and cannot claim benefit contemplated under Section 80-O. If we look from this angle also, we are of opinion that assessee is entitled to succeed. (emphasis in bold supplied) 6. facts discernible from material on record make out that on similar pattern, ITAT also allowed claim of this appellant in relation to assessment years 1994-95, 1995-96 and 1996-97, while following its earlier orders. As noticed, appeals against orders passed for these assessment years were clubbed together and disposed of by High Court by way of common judgment dated 09.06.2016, which is in challenge in these appeals. impugned judgment by High Court 7. In its impugned common judgment dated 09.06.2016, High Court of Kerala has disagreed with ITAT and has disallowed claim for deduction by appellant essentially with finding that appellant was merely marine product procuring agent for foreign enterprises, without any claim for expertise capable of being used abroad rather than in India and hence, alleged services do not qualify as services rendered from India , for purpose of Section 80-O of Act of 1961. 17 8. In view of submissions made and subject-matter of these appeals, we may examine observations and reasoning in impugned judgment that have led High Court to disagree with ITAT and to reject claim of appellant for deduction under Section 80-O of Act in requisite specifics.10 8.1. main plank of submissions on behalf of revenue, with reference to agreements between assessee on one hand and two foreign companies respectively on other, had been that assessee was simply agent of foreign enterprises for procuring marine products from India; that all its services were incidental to its main functioning as fish-procuring agent; and that assessee rendered its services "in India", contra-distinguished with expression "from India". It was also contended on behalf of revenue that mere communication between assessee based in India and principal based abroad does not bring their transactions within purview of Section 80-O. submissions on behalf of revenue were supported with Division Bench decision of that High Court in Commissioner of Income Tax v. Thomas Kurian (Dead) through LR Smt. Primari C. Thomas, since reported as (2012) 72 DTR (Ker). On other hand, it was contended on behalf of assessee that on reading principal provision of Section 80-O of Act with clause (iii) 10 It may, in passing, be observed that one of preliminary points raised before High Court by assessees had been on maintainability of appeals by revenue in face of Circular No. 21/2015 dated 10.12.2015 due to low-tax effect and no likelihood of cascading effect because provision having been amended subsequently. High Court did not agree with assessees on this aspect while observing that ITAT has passed all orders by following its initial order relating to ITA No. 131 of 2002; and order impugned has cascading effect. This aspect of matter does not concern us in these appeals and hence, need no further comment. 18 of Explanation, it was clear that once service is provided by Indian company (or other person who is resident in India) and same is 'used' by foreign entity outside India, it made no difference if advice is rendered from Indian soil. In relation to query of Court as to whether all services mentioned in agreement would come within purview of Section 80-O, response on behalf of assessee had been that if recipient of services is situated outside, all services rendered by assessee in terms of agreement come within sweep of provision . It was, therefore, contended on behalf of assessee that assessee's establishing which of its services qualifies for deduction is of no consequence, rather unnecessary . decision in Thomas Kurian (supra) was distinguished on behalf of assessee with reference to facts that assessee therein was engaged only in verification of quality and fitness of marine products but provided no commercial or technical information from India to foreign buyers whereas assessee in present case had been supplying commercial and technical information and, using information supplied by assessee, foreign companies had taken decision outside India as regards how they could purchase merchandise. submissions on behalf of assessee were supported with reliance on said Circular No. 700 dated 23.03.1995 and decisions in M/s Continental Construction Ltd. v. Commissioner of Income Tax, Central-I: (1992) 195 ITR 81 (SC); Commissioner of Income Tax v. Mittal Corporation: (2005) 272 ITR 87 (Delhi); Li & Fung 19 India (P) Ltd. v. Commissioner of Income Tax: (2008) 305 ITR 105 (Delhi); Commissioner of Income Tax v. Chakiat Agencies (P) Ltd.: (2009) 314 ITR 200 (Mad); Commissioner of Income Tax v. Inchcape India (P) Ltd: (2005) 273 ITR 92 (Delhi); Central Board of Direct Taxes, New Delhi & Ors. v. Oberoi Hotels (India) Pvt. Ltd.: (1998) 231 ITR 148 (SC) and E.P.W. Da Costa (supra). 8.2. Having thus taken note of rival submissions, High Court proceeded to analyse Section 80-O of Act with its Explanation (iii). After reproducing relevant text of provisions, High Court entered into lexical semantics of prepositions from and in with reference to their dictionary meanings. Then, reverting to Section 80-O of Act, High Court observed that therein, constants were Indian agent, foreign principal, and Indian agent rendering services from India but variables were as to how and where services were used. Thereafter, High Court looked at intent and purpose behind Section 80 O of Act and observed as under: 29. Every nation meets any measure more than half way if it results in nation's augmenting foreign reserves. India is no exception. It encourages and provides incentives to those who earn foreign exchange. Over and above incentive is facility of deduction from taxable income in foreign exchange--that is what Section 80-O is. legislative intent behind provision is not far to seek. Government encourages entrepreneurial initiative and innovation by Indian companies at international level. In measure, nation encourages any Indian showcasing Indian intellect internationally. That accepted, if Indian technology, know-how, etc., is used in India itself even by foreign company, it is intellectual enterprise not only from 20 India but also in India. We reckon that use means end use of information or know-how, but not its mere processing. 8.3. Proceeding further, High Court examined position obtainable in regard to interpretation and application of Section 80-O of Act from precedents cited at Bar. High Court pointed out that in Thomas Kurian (supra), case dealt with by same High Court, main service rendered by assessee was admittedly of examining quality and type of fish processed by exporters in India and certifying fitness of product for shipment; and such service was rendered entirely in India. It was further pointed out that in E.P.W. Da Costa (supra), assessee had been consultant engaged in conducting specialised economic and public opinion research on all-India basis to assess attitudes of political, social and economic subjects and in given nature of work, High Court of Delhi held that BBC, based in London, can be said to have used information received from assessee to formulate or modify its broadcasting programmes to India; and though information was provided by assessee from India, it was used in another country in its entirety. As regards decision in Mittal Corporation (supra), High Court observed that assessee therein received commission as buying agent of certain foreign enterprises and it was held that it was not necessary that assessee must provide technical services even where it received consideration for only providing commercial information. High Court, however, observed that from said decision, it could not be 21 gathered as to how commercial information provided by assessee was used by foreign enterprises outside India which was crucial aspect for determining application of provision . As regards decision in Oberoi Hotels (supra), High Court again observed that factual background was not explicit, but since agreement involved assessee's training Nigerian personnel, it was held that assessee undoubtedly under contract must make use of its commercial and scientific expertise as well as experience and skill, outside India. As regards case of Inchcape India (supra), it was pointed out that assessee had to work in textile testing, inspection of soft lines, electrical and electronic products according to existing standards of European and American markets, etc. It was also pointed out that issue arose much before insertion of Explanation (iii) to Section 80-O of Act. In reference to decision in Li & Fung (supra), High Court pointed out that therein, assessee claimed to have rendered technical services out of India as buying agent and High Court of Delhi held that services rendered by assessee required knowledge, expertise and experience; and, therefore, fee it received from foreign enterprises for supply of commercial information sent from India for use outside India was eligible for deduction under Section 80-O of Act. Court observed that said decision gave judicial imprimatur to Board's clarification to effect that if assessee renders technical or professional services from India to foreign Government or enterprise outside India, it can claim deduction even 22 if foreign recipient utilises 'benefit of such services in India'. In this line of consideration, High Court lastly referred to decision in case of Chakiath Agencies (supra) and pointed out that therein, assessee, shipping agent, was to ensure that ship owner picks up cargo and transports it within time and at agreed rates; and information regarding availability of cargo to ship owners and its destinations at frequent intervals enabled ship owners to program ships' travel touching Indian coasts. In given facts, it was held that assessee had rendered commercial service to foreign shipping owner for his use outside India and received commission in convertible foreign exchange, entitling it to benefit of Section 80-O of Act. After such discussion in relation to aforesaid decisions, High Court observed that two crucial aspects of Section 80-O of Act had not fallen for consideration therein: as to what type of services rendered by Indian entity falls within sweep of provision and as to what is true import of expression use outside India . High Court said thus: 46 With due regard to above pronouncements, we, however, feel it necessary to point out that in none of them, two crucial aspects of Section 80-O of Act have not fallen for consideration : (i) What type of services rendered by Indian entity falls within sweep of provision; (ii) what is true import of expression use outside India ? 8.4. Having said so in relation to aforementioned decisions, High Court took note of decision of this Court in case of Continental Construction (supra), wherein assessee was civil construction company that had entered into various contracts for construction, inter 23 alia, of dam and irrigation projects in Libya and water supply projects in Iraq after obtaining approval of CBDT in terms of then applicable requirements of Section 80-O of Act. High Court noticed that in that case, on assessee's claim for benefit under Section 80-O of Act, this Court has held that assessee was undoubtedly rendering services to foreign Government and those were technical services indeed, for they required specialised knowledge, experience and skill. revenue s contention that those services were not covered by Section 80-O of Act because there was no privity of contract between employees of assessee and foreign Government was rejected by this Court while observing that assessee was company and any technical services rendered by it could only be through medium of its employees. As regards claim for deduction based on labelling of receipts, this Court held that that eligibility of item to tax or tax deduction could hardly be made to depend on label given to it by parties in that, assessee was not entitled to claim deduction under Section 80-O merely because certain receipts were described in contract as royalty, fee or commission and at same time, absence of specific label cannot destroy right of assessee to claim deduction if, in fact, consideration for receipts can be attributed to sources stated in section. High Court also noted dictum of Continental Construction that it is duty of revenue and right of assessee to see that consideration paid under contract legitimately attributable 24 to such information and services is apportioned, and assessee is given benefit of deduction available under section to extent of such consideration. 8.5. High Court further took note of decision of Madras High Court in case of Commissioner of Income Tax v. Khursheed Anwar: (2009) 311 ITR 468 (Mad) wherein assessee had exclusive agency for promoting and concluding sales contract in India for machinery and equipment for enterprise based in Italy. On strength of agreement, assessee worked with foreign enterprise but Court observed that benefit under Section 80-O of Act was not available to assessee for mere asking; records and materials must support claim and benefit of said Section cannot be claimed as matter of right, it being question of fact, which could be considered by AO on basis of records. In that case, Appellate Authority had recorded specific finding that assessee has simply effected sale of machinery and spares manufactured by foreign enterprise; and, therefore, assessee received only sales commission, which was not for any activities relating to technical or professional services and hence, assessee was not entitled to claim deduction under Section 80-O of Act. 8.6. High Court summed up requirements, as emanating from ratio of decisions in Continental Construction and Khursheed Anwar (supra) as follows: - 25 53. Both from Continental Construction and Khursheed Anwar we gather that not every receipt from foreign enterprise in convertible foreign exchange does not (sic) automatically get qualified for deduction under Section 80-O-- nomenclature notwithstanding. burden, in fact, is on assessee to prove before Revenue through cogent material that commission is for services it rendered falling within scope of section. Neither of facts-- existence of contract and receipt of convertible foreign exchange--leads to presumption that commission is deductible as provided in Section 80-O of Act. 8.7. Having, thus, traversed through provision of law applicable; meaning of expressions occurring in text thereof; and position obtainable from precedents, High Court proceeded to examine facts and, with reference to aforesaid agreements of appellant with French and Japanese companies respectively, held that some of functions said to have been discharged by assessee cannot qualify for deduction under Section 80-O of Act; and in none of appeals, assessees had placed any material as regards services they had rendered to qualify under that provision. 8.8. While referring to Explanation (iii) to Section 80-O of Act, High Court held that mere transferring information abroad would not establish that service is rendered from India and not in India; that all receipts cannot qualify for concession; that range of services referred to in Section 80-O of Act have thread of connectivity in all intellectual endeavours mentioned therein. High Court summed up its discussion in following passages:- 26 56. To sum up, we wish to conclude that Tribunal has erred on two counts in holding that assessees are entitled to benefit of deduction under Section. 80-O of Act : First, mere transmission of information to foreign enterprise, evidently, abroad does not go to show that it is service rendered from India, but not in India. With element of certainty, we can as well say that once there is contract, Indian agent always interacts with and sends information--even technical know-how--to foreign enterprise abroad. If that alone qualifies for deduction without reference to services rendered in India , very expression in explanation (iii) becomes otiose. Trite it is to observe that statutory surplusage is not settled canon of construction; rather it is to be avoided. 57. purpose of provision is to provide incentive to indigenous know-how of whatever nature that reaches shores of foreign nations and gets applied there. resultant fruits may percolate to India, too, as is case in E.P.W. Da Costa and Continental Construction, even in which Apex Court has held that not all receipts can claim concession. If we refer back to analogy employed by learned senior counsel for assessees, advocate in India may render services to foreign client stationed abroad concerning case pending in India. It is service rendered not only from India, but also in India. On other hand, if that piece of professional advice is used abroad, even involving clients of Indian origin or laws of this nation as it happens in international arbitrations, remuneration is qualified for benefit. 58. Once we look at range of services referred to in Section 80-O, we can discern thread of connectivity in all intellectual endeavours mentioned therein : 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 available or provided or agreed to be made available or provided to such Government or enterprise by assessee. It can also be in consideration of technical or professional services rendered or agreed to be rendered outside India to such Government or enterprise by assessee. They cannot be said to be entirely discrete and disparate. services have air of intellectuality; as such, all and sundry services rendered to foreign enterprise cannot be taken into account, lest it should amount to doing violence to explanation (iii). 27 (emphasis in bold supplied) 8.9. While concluding on matter, High Court referred to dictionary meaning of expression render and observed that rendering includes both providing and performing ; and that in context of Section 80-O of Act, services may be rendered in India but have to be performed on foreign soil. High Court also observed that, if assessees had at all rendered certain services which qualify for deduction, they had failed to place any material in that regard; and agreements in question only point out that assessees were marine product procuring agents for foreign enterprises without any claim for expertise capable of being used abroad rather than in India. Accordingly, High Court answered question of law in favour of revenue and set aside orders passed by ITAT. RIVAL SUBMISSIONS Lead arguments on behalf of appellant 9. On debate relating to question of applicability of Section 80- O of Act to foreign exchange earned by appellant in lieu of services rendered by it to foreign enterprises, learned senior counsel for appellant has made wide-ranging emphatic submissions on process of interpretation, scheme and object of Section 80-O and has also referred to decisions which, in his contention, cover present case on substance and principles. 28 9.1. learned senior counsel for appellant has strenuously argued that High Court has approached entire case from altogether wrong angle and with rather linguistic and pedantic approach to interpretation while ignoring basic object and purpose of Section 80-O of Act, which is meant to give incentive for earning foreign exchange. With reference to decision in Abhiram Singh v. C.D. Commachen (Dead) by LRs. and Ors.: 2017(2) SCC 629, learned counsel has submitted that this Court has cautioned against making fortress out of dictionary but High Court has proceeded with excessive reliance on dictionary and has merely looked at text without its context and object and with such approach, has unjustifiably upturned well-considered decision of ITAT. Learned counsel has also referred to decision of this Court in case of Commissioner of Income Tax, Thiruvananthapuram v. Baby Marine Exports, Kollam: (2007) 290 ITR 323 (SC), to submit that incentive provision has to be construed purposively, broadly and liberally; and for provision like Section 80-O of Act, when basic object is to earn foreign exchange, incentive is required to be granted if object is to be achieved. With reference to decision in Commissioner of Income Tax-IV, Tamil Nadu v. B. Suresh: (2009) 313 ITR 149 (SC), learned counsel has pointed out that therein, even five years licence to exhibit Indian film abroad was held to be that of export of goods and merchandise, covered by Section 80HHC of Act; and Section 80-O of Act, being equally provision for incentives to earn 29 foreign exchange, ought to receive same liberal approach. According to learned counsel, approach of High Court in present case had been too narrow and rather unrealistic. 9.2. learned senior counsel would contend that on plain reading of Section 80-O, it is clear that it applies to income by way of royalty, commission, fees or any similar payment received by assessee from foreign enterprise in consideration for use outside India, inter alia, of information concerning industrial, commercial or scientific knowledge, experience or skill made available to foreign enterprises, provided that income is received in convertible foreign exchange in India; and Explanation (iii) to Section 80-O makes it clear that this Section would apply even to services rendered from India, which are to be treated for purpose of this Section as services rendered outside India. Learned counsel has argued that Section 80-O is by no means confined to grant of user of intellectual property rights or intellectual activities, as contended by revenue and as observed by High Court. In this regard, learned counsel has again referred to words information concerning industrial, commercial or scientific knowledge, experience or skill in latter part of Section 80-O and has argued that these words are distinct from initial part of this Section, dealing with use of intellectual property rights. learned counsel has further argued that even commission , which could relate to ordinary commercial activities, is also covered by Section 80-O. 30 9.3. While strongly relying upon decision of this Court in case of J. B. Boda & Co. Pvt. Ltd v. Central Board of Direct Taxes, New Delhi: (1997) 223 ITR 271 (SC), learned senior counsel has argued that therein, even commission received by reinsurance broker, who only sent information to foreign reinsurance company regarding risk involved and other related data, was held entitled to benefit of Section 80-O of Act in respect of entire commission. learned counsel has argued that activity of reinsurance broker cannot possibly be described as intellectual activity or as technical or professional service; and in that case of J.B. Boda & Co., activity only consisted of sending commercial information from India about proposed reinsurance contract on basis of which, reinsurance company took commercial decision to enter into contract. learned counsel has pointed out that in that case, this Court had referred to Circular issued by CBDT specifically directing that deduction under Section 80-O should be allowed on commission received by Indian reinsurance broker even though it was only deducted from remittance made to company abroad and there was no actual inward remittance of foreign exchange. According to learned counsel, this judgment decisively negatives stand of revenue that Section 80-O applies only to payment for use of intellectual property rights or for intellectual activities. learned counsel would argue that broad, liberal and purposive interpretation of Section 80-O in J. B. 31 Boda & Co. is of crucial importance and analogy thereof applies to appellant. 9.4. learned senior counsel for appellant has further relied upon decision of Delhi High Court in E.P.W. Da Costa (supra) with submissions that therein, Indian assessee only carried out market survey of radio listeners in India and communicated information to BBC in London; and BBC utilized that information to frame Hindi language broadcasts to India. However, payments made towards such services by BBC to assessee were also taken to be covered by Section 80-O of Act. 9.5. As regards services and activities of appellant, learned senior counsel has referred to findings of Appellate Authority as also of ITAT and has submitted that said findings are to effect that appellant rendered services from India to its foreign customers by making over to them information regarding seafood available in various Indian markets, their quality, price ranges etc.; and, on basis of this information, foreign customers took decisions on whether or not to import seafood from India, what to import and from which market and supplier. Further, other basic requirement of Section 80-O, i.e., remittance of amount in convertible foreign exchange to India has also been fulfilled. According to learned counsel, clear and unequivocal findings of Appellate Authority and ITAT are findings of fact and they fully establish that appellant furnished information from India to its 32 customers abroad regarding its industrial and commercial knowledge and skill, and such information was utilized abroad by said foreign customers and appellant s commission was remitted to India in convertible foreign exchange. learned counsel would argue that nothing of perversity was shown in regard to such findings of fact so as to call for interference but High Court has proceeded on basis which is totally inconsistent with those findings. With reference to decision of this Court in case of K. Ravindranathan Nair v. Commissioner of Income Tax, Ernakulam: (2001) 247 ITR 178 (SC), learned counsel has argued that there was no scope of interference in findings of fact in this case. 9.6. Assailing findings of High Court in impugned judgment, learned senior counsel has also argued that approach of High Court that unless services were rendered abroad, amount received would not qualify for benefit of Section 80-O is directly contrary to plain provision contained in Explanation (iii) to Section 80-O and is also contrary to Circular No. 700 dated 23.09.1995 which had clarified that Section 80-O covered not only services rendered outside India but also services rendered from India to party outside India; and it does not matter if service is subsequently utilized by foreign customer in India. In regard to case of appellant, learned counsel would submit that in fact, foreign enterprises related with appellant do not have any operation or place of business in India and in such situation, there was no question of appellant rendering service to customers in India. Thus, according 33 to learned senior counsel, activities in question are squarely covered by Section 80-O of Act. respondent-revenue 10. In counter to submissions so made on behalf of appellant, learned senior counsel for respondent-revenue has also referred to object and purpose behind provisions contained in Section 80-O of Act; rules of interpretation, which, in his contention, ought to be applied to these provisions; and, while seeking to distinguish decisions cited on behalf of appellant, has relied upon other decisions, which, according to him, apply to present case and which duly support view taken by High Court in impugned judgment. 10.1. learned senior counsel for revenue has pointed out that provisions similar to Section 80-O were originally available in former Section 85-C of Income Tax Act, 1961, which was introduced with purpose to encourage Indian industries to develop technical know-how and services and make it available to foreign companies so as to augment foreign exchange earning of our country and to establish reputation of Indian technical know-how in foreign countries. Reverting to contents of Section 80-O of Act, as applicable to case at hand, learned counsel has submitted that its purpose is indicated in heading itself that same is for providing deduction in respect of royalties etc., received from certain foreign enterprises. Dissecting relevant parts of this provision, learned counsel would submit that some of essential 34 requirements for its applicability are that assessee must receive income by way of royalty, commission, fees or similar payment from foreign enterprise; consideration must be for technical or professional services, of patents, inventions or similar intellectual property or information concerning industrial, commercial or scientific knowledge; and services must be rendered outside India. While reiterating and emphatically underscoring observations in impugned judgment, learned counsel would submit that intention of legislature behind introducing Section 80- O was to provide deductions for only that income which is received through intellectual activity/intellectual endeavours; and simple trading activity, though may require certain commercial or industrial information, cannot be said to be covered by this provision. With reference to Explanation (iii) to Section 80-O, learned counsel would argue that principal provision specifically states that it covers services rendered outside India and explanation clarifies that services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India; and therefore, services rendered by assessee to foreign entity must be rendered outside India, in foreign soil, and not in India, though they may be rendered from India. 10.2. As regards principles of interpretation, learned senior counsel for revenue has strongly relied upon Constitution Bench decision in Commissioner of Customs (Import), Mumbai v. Dilip Kumar & Co. and Ors: (2018) 9 SCC 1 to submit that it is now settled beyond 35 doubt that taxing statutes are subject to rule of strict interpretation, leaving no room for any intendment; and benefit of ambiguity in case of exemption notification or exemption clause must go in favour of revenue, as exemptions from taxation have tendency to increase burden on unexempted class of tax payers. same principles, according to learned counsel, shall apply to Section 80-O of Act and, for law declared by Constitution Bench, decision relied upon by learned counsel for appellant in Baby Marine Exports (supra), which even otherwise dealt with Section 80HHC of Act and not Section 80-O, is of no help to appellant. 10.3. Taking on to facts, learned senior counsel would submit that activities alleged to be rendered by appellant to foreign entities as per respective agreements were not of technical or professional services so as to be covered by main part of provision; and further, they are excluded by virtue of Explanation (iii) to Section 80-O, for having been rendered in India and not from India . learned counsel would elaborate on submissions that as per agreements, appellant was only to locate reliable and assured suppliers of marine products, to finalise pricing and before exporting, to check quality of goods to be exported from India to foreign entity and to communicate same to foreign entity. Moreover, payment was made on basis of invoice amount; and not on basis of any specialised commercial or technical knowledge given to foreign entity. learned counsel has particularly referred to 36 Article 3 of above-referred agreement with GELAZUR to point out that if quality or packaging of goods was found to be unsatisfactory after inspection in France, foreign company had no liability to pay agent s fee. Thus, according to learned counsel, activities in respect of which agreements were entered into by appellant were only that of buying or procuring agent and do not fall within ambit of Section 80-O of Act; and primary activity being of certification, which is done in India, and of sourcing goods, which is also done in India, Section 80-O of Act is not applicable per force of its Explanation (iii). learned counsel has yet further submitted, while supporting observations of High Court, that if one were to assume that appellant had rendered certain services which qualify for deduction, no material in that regard has been placed on record. 10.4. learned senior counsel for revenue has drawn support to his contentions that Section 80-O of Act does not apply to appellant by making reference mainly to two decisions. In first place, learned counsel has relied upon decision of this Court in B.L. Passi v. Commissioner of Income-Tax: 2018 (404) ITR 19 (SC) with submissions that this decision applies on all fours to present case. Therein, assessee stated that as per agreement, it was to provide blueprints for manufacture of dies for stamping of doors of cars, though no blueprint sent was produced and there was nothing to show that sales were effected because of information given by assessee. This Court held that 37 assessee was only managing agent and was not rendering technical services within meaning of Section 80-O of Act. Hence, there was no basis for grant of deduction. Next, learned senior counsel has referred to decision of Kerala High Court in case of Thomas Kurian (supra), where assessee was only examining quality and type of fish processed by exporters and was certifying fitness for shipment to foreign buyer, who was bound to accept goods shipped from India. It was held that referred services were rendered in India and hence, first eligibility condition of Section 80-O, that services should be rendered outside India, was not fulfilled and hence, benefit of deduction under Section 80-O of Act was held not available even though second condition of receiving foreign exchange was fulfilled. learned senior counsel would submit that principles available in said decisions directly apply hereto and appellant is not entitled to claim deduction under Section 80-O of Act. 10.5. Seeking to distinguish decisions cited by other side, learned counsel for revenue has submitted that in case of J.B. Boda & Co. (supra), issue was only about method of receipt of foreign exchange which would qualify for Section 80-O deduction, which is not in dispute in present appeals; and relied upon Circular of 1995 was also limited to point as to what constitutes receipt of foreign exchange. According to learned counsel, nature of activity was not in issue in that case and hence, there is no such ratio decidendi which could support 38 case of appellant. learned counsel has further submitted that case of E.W.P. Da Costa (supra) was of entirely different activity inasmuch as therein, statistical tables were compiled by assessee after analysing masses of numerical data, which was collected with audience research studies in India to assess and analyse radio listening habits of Indians for BBC; and such services were held to be highly technical, pertaining to scientific knowledge and not mere data collection because those services enabled BBC to broadcast not only in India but other parts of world. As regards decision in B. Suresh (supra), it has been submitted that in that case, there was admittedly transfer of rights of feature films for exploitation outside India and main issue was only whether there could be said to be sale within meaning of Section 80HHC, which is irrelevant to present case. 10.5.1. It has also been submitted on behalf of respondent that, in judgments relied upon by appellant before High Court, crucial twin aspects of Section 80-O, i.e., as to what type of service rendered by Indian entity comes within sweep of this provision; and as to what is true import of expression use outside India as per Explanation (iii) to Section 80-O, did not fall for consideration and hence, those judgments were of no support to proposition sought to be advanced by appellant. It has also been submitted that in case of Continental Construction (supra), contracts were for carrying out physical construction of dams and irrigation projects in foreign countries, i.e., not in 39 India and besides that, in special circumstances, benefit of Section 80- O was only allowed in part rather than on entire contract , where revenue was directed to bifurcate and look at each of services rendered. According to submissions on behalf of respondent, appellant relied upon this decision in High Court but gave it up in this Court realising that same is in favour of revenue; and if at all ratio is applied, at best, benefit of Section 80-O might have been considered activity-wise, if appellant had placed any material as to actual services rendered, but no such material had been placed on record by appellant. 10.6. In regard to different services by same assessee, some of which may not qualify for deduction, apart from relying on observations in Continental Construction (supra), reference has also been made on behalf of revenue to two circulars of CBDT i.e., Circular No. 187 dated 23.12.1975 and Circular No. 253 dated 30.04.1979. It has been pointed out that Circular dated 23.12.1975 provided, inter alia, that in case of composite agreement which specified consolidated amount as consideration for purposes which included matters outside scope of Section 80-O, CBDT may not approve such agreement for purposes of Section 80-O if it was not possible to properly ascertain and determine amount of consideration relatable to provision of know-how or technical services etc., qualifying for Section 80-O. Thus, benefit of Section 80-O could have been denied to entire amount of royalty, 40 commission, fees etc., receivable under such agreement. Thereafter, by Circular dated 30.04.1979, it was decided that in such cases of composite agreement, approval would be granted by CBDT subject to suitable disallowance for non-qualifying services, after taking into consideration totality of agreement, so that balance of royalty/fees, etc., which was for services covered by Section 80-O, could be exempted. This Circular also clarified that trade enquires will not qualify for deduction under Section 80-O as also technical services rendered in India. It has been contended that if at all appellant had been rendering some such services which could qualify for deduction, it had not given any such break- up of services and corresponding receipts and therefore, benefit of Section 80-O of Act is not available to appellant. 10.6.1. As regards circular relied upon by counsel for appellant, i.e., Circular No. 700 dated 23.03.1995, it has been contended on behalf of revenue that same is of no assistance to appellant because, as per paragraphs 3 and 4 thereof, services have to be rendered outside India, and it only clarifies that foreign recipient of services may utilise benefit of such services in India whereas in present case, appellant merely rendered services in India and only as agent. 10.7. learned senior counsel for revenue has also submitted that findings of fact arrived at by ITAT were clearly challenged before High Court in ITA No. 131 of 2002 and, in any case, it being matter of interpretation of statutory language of Section 80-O and its Explanation (iii), 41 contention on behalf of appellant about want of challenge to findings is without substance. Rejoinder submissions on behalf of appellant 11. submissions made on behalf of respondent have been duly refuted on behalf of appellant by way of rejoinder submissions. 11.1. As regards principles of interpretation in case of Dilip Kumar & Co. (supra), it has been contended on behalf of appellant that reference to said decision is wholly inapposite because that deals with interpretation of exemption notification and not incentive provision like Section 80-O, which has been interpreted in J.B. Boda & Co. (supra) or Section 80HHC, which has been interpreted in B. Suresh and Baby Marine Exports (supra). 11.2. As regards decisions relied upon by revenue on application of Section 80-O of Act, it has been submitted that reference to case of B.L. Passi (supra) is completely misplaced because therein, assessee had not placed any material whatsoever to show that it had rendered any service to foreign customer; and therefore, issue regarding nature of service did not even arise. As regards decision of Kerala High Court in Thomas Kurian (supra), it has been submitted that nature of services rendered therein were very different from those of appellant because said assessee was only inspector and certifier; and even otherwise, said decision is not of any force because decision of this Court in J.B. Boda & Co. (supra) was not considered therein and 42 decision of Delhi High Court in E.P.W. Da Costa (supra), which was accepted by revenue and was allowed to become final, was also not considered. It has also been submitted that there is no cogent or specific reply by respondents to submissions based on decisions of this Court in case of J.B. Boda & Co. (supra); and it has been reiterated that even activity of reinsurance broker was taken to be covered for benefit of Section 80-O though such activity cannot possibly be described as intellectual activity or as technical or professional service. It has been contended that liberal and purposive approach adopted by this Court in J.B.Boda & Co. for interpreting incentive provision of Section 80-O is of utmost importance to present case. It has further been contended in rejoinder submissions that there is no material distinction between cases of J.B. Boda & Co. and E.P.W. Da Costa on one hand and that of appellant on other; and superficial comments made on behalf of respondents in regard to these decisions remain meritless. 11.2.1. Similarly, as regards Circulars dated 23.12.1975 and 30.04.1979, it has been contended that reference to these circulars is wholly misplaced because they dealt with matter of approval by CBDT of agreement with foreign customers but such need for approval of CBDT had been dispensed with by amendment of Section 80-O long ago and these circulars have nothing to do with issues involved in present case. 43 11.3. With reiteration of submissions relating to nature of activity of appellant and findings of ITAT, it has been argued that contention of respondents that primary activity of appellant had merely been of procuring agent remains untenable. It has also been contended that as per finding of fact of ITAT, it is but clear that whole of services rendered by appellant and entire amount received by it in foreign exchange was covered by Section 80-O of Act; and that attempt on part of respondent to suggest as if only part of amount received by appellant may be eligible for benefit of Section 80- O remains baseless. In rejoinder submissions, it has also been indicated that reference to decision of this Court in Continental Construction (supra) by respondents is irrelevant, as same has not been relied upon by appellant. 12. We have given thoughtful consideration to rival submissions and have examined records with reference to law applicable. SECTION 80-O OF INCOME TAX ACT, 1961 13. Having regard to subject-matter and questions involved, appropriate it would be to take note of relevant provisions contained in Section 80-O of Act of 1961 and clause (iii) of Explanation thereto at outset. This Section 80-O has undergone several amendments from time to time but, for present purpose, suffice would be to extract relevant and pivotal provisions therein, as existing at relevant time and as applicable to present appeal, as under: - 44 80-O. Deduction in respect of royalties, etc. from certain foreign enterprises. Where gross total income of assessee, being Indian company or person (other than company) who is resident in India, includes any income by way of royalty, commission, fees or any similar payment received by assessee from Government of foreign State or foreign enterprise in consideration for use outside India of 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 available or provided or agreed to be made available or provided to such Government or enterprise by assessee, or in consideration of technical or professional services rendered or agreed to be rendered outside India to such Government or enterprise by assessee, and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside India, is brought into India, by or on behalf of assessee in accordance with any law for time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to provisions of this section, deduction of amount equal to fifty per cent of income so received in, or brought into, India, in computing total income of assessee: *** *** *** Explanation. For purposes of this section, *** *** *** (iii) services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India; *** *** *** 11 14. Worthwhile it would also be to take little excursion into relevant parts of history related with Section 80-O of Act while putting glance over some of features of developments relating to provision/s in Income Tax, 1961 concerning such deduction in respect of particular class of income, received by way of royalty, commissions etc., by assessee in 11 This extraction is after omitting other parts of Section 80-O of Act, including its Provisos and other clauses of Explanation, being not relevant for question at hand. 45 consideration of imparting specified intellectual property, or extending specified information, or rendering specified services to foreign State or foreign enterprise. 14.1. In early stages of advent of Act of 1961, Chapters VI-A, VII and VIII respectively dealt with deductions to be made in computing total income, exempted portion/s of income, and rebates and reliefs but, several of provisions in these Chapters as also some of provisions of Chapter XII were recast and were put together in newly framed Chapter VI-A by Finance (No.2) Act, 1967 with effect from 01.04.1968 with result that all such incentives or reliefs were directly provided by way of deductions from total income itself. In its framework, while Part of this Chapter VI-A contains general provisions including definitions, Part B thereof provides for deductions in respect of certain payments and Part C provides for deductions in respect of certain incomes in computation of total income. Part CA and Part D making provisions for special class of income or persons were introduced later. 14.2. aspect germane to present case is that forerunner to provision relating to deduction of tax on royalties etc., received from certain foreign companies, was Section 85-C in Act of 1961, that was inserted by Act No.13 of 1966 w.e.f. 01.04.1966 and was placed in Chapter VII. said Section 85-C and several other provisions of Chapter VII were omitted by Section 33, read with Third Schedule, item 14, of Finance (No.2) Act, 1967. reason for omission of said Section 85-C was that similar 46 provision, with revised requirements, came to be introduced by way of Section 80-O in new Chapter VI-A12-13. 14.3. Section 80-O as introduced in Chapter VI-A got several modifications/alterations in regard to entities eligible to claim such deductions as also extent (that is percentage) of admissible deduction, but core of object remained that of encouraging export of Indian technical know-how and augmentation of foreign exchange reserves of country. While relief was originally admitted in Section 80-O for 12 For purpose of reference, we are reproducing said repealed Section 85-C as under:- 85C. Deduction of tax on royalties, etc., received from certain foreign companies Where total income of assessee, being Indian company, includes any income by way of royalty, commission, fees or any similar payment received by it from company which is neither Indian company nor company which has made prescribed arrangements for declaration and payment of dividends within India (hereafter, in this section, referred to as foreign company) in consideration for use of 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 available or provided or agreed to be made available or provided to foreign company by assessee, or in consideration of technical services rendered or agreed to be rendered to foreign company by assessee, under agreement approved by Central Government in this behalf before 1st day of October of relevant assessment year, assessee shall be entitled to deduction from income-tax with which it is chargeable on its total income for assessment year of so much of amount of income-tax calculated at average rate of income-tax on income so included as exceeds amount of twenty-five per cent. thereof. 13 For purpose of reference, we may also reproduce Section 80-O in its original form, as inserted by Finance (No.2) Act, 1967 as under: 80O. Deduction in respect of royalties, etc., received from certain foreign companies. Where gross total income of assessee being Indian company includes any income by way of royalty, commission, fees or any similar payment received by it from foreign company in consideration for use of 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 available or provided or agreed to be made available or provided to foreign company by assessee, or in consideration of technical services rendered or agreed to be rendered to foreign company by assessee, under agreement approved by Central Government in this behalf before 1st day of October of relevant assessment year, there shall be allowed deduction from such income of amount equal to sixty per cent. thereof, in computing total income of assessee. 47 dealing with foreign company only, but later on, dealing with foreign Government or foreign enterprise was included and thereby, scope of coverage and activities was substantially expanded. However, as noticed from erstwhile Section 85-C and originally inserted Section 80-O, any such agreement with foreign entity required approval of Central Government and this requirement was later on altered to that of approval of CBDT. Various other features and aspects related with development and operation of Section 80-O, as then existing, were dealt with by two circulars referred to on behalf of revenue that is, Circular No. 187 dated 23.12.1975 and Circular No. 253 dated 30.04.1979. In fact, these circulars came up for their fuller exposition by this Court in case of Continental Construction (supra), as we shall notice hereafter little later. At this juncture, we may usefully reproduce relevant text of these two notifications which throw light on provisions as then existing and as applied. relevant parts of said circulars read as under:- Circular No. 187, dated 23rd December, 1975. Subject : Section 80-O of Income-tax Act, 1961- Guidelines for approval of agreements. With twin objectives of encouraging export of Indian technical know-how and augmentation of foreign exchange resources of country, section 80-O of Income-tax Act, 1961, provides for concessional tax treatment in respect of income by way of royalty, commission, fees or any similar payment received from foreign Government or foreign enterprise, subject to satisfaction of certain conditions laid down in said section. 2. One of conditions for availability of tax concession under section 80-O is that agreement should be approved by Central Board of Direct Taxes in this 48 behalf. application for approval of agreement is required to be made to Central Board of Direct Taxes before 1st day of October of assessment year in relation to which approval is first sought. form of application for this purpose has been standardised and specimen is given in Appendix. 3. object of provision when it was first introduced as section 85C in Income-tax Act, 1961, was stated in Board s Circular No.4P (LXXVI-61) of 1966, to be to encourage Indian companies to export their technical know- how and skill abroad and augment foreign exchange resources of country. This was reiterated in Board s Circular No.72 explaining changes introduced by Finance (No.2) Act, 1971. Keeping in view purpose behind this tax incentive and requirements of statutory provisions, Board have evolved following guidelines for grant of such approval:- .. *** *** *** (ix) In case of composite agreement specifying consolidated amount as consideration for purposes which include matters outside scope of Section 80-O (e.g., use of trade-marks, supply of equipment, etc.) amount of consideration relating to provision of technical know-how or technical services, etc., qualifying for purposes of section 80-O will have to be determined by Income-tax Officer separately at time of assessment after due appreciation of relevant facts. Where, however, in opinion of Board, it will not be possible to properly ascertain and determine amount of consideration relatable to provision of know-how or technical services, etc., qualifying for section 80-O, Board may not approve such agreement for purposes of section 80-O of Act. *** *** *** Circular No.253, dated 30th April, 1979. Section 80-O of Income-tax Act, 1961 Guidelines for approval of agreements Further clarifications. Attention is invited to Board s Circular No. 187 (F. No. 473/15/73- FTD), dated 23rd December, 1975, on above subject laying down guidelines for grant of approval under section 80-O. Board has had occasion to re-examine aforesaid guidelines and it has been decided to modify guidelines to extent indicated below : - 49 (i) Para.3(iii) of Circular dated 23-12-1975 provided that agreement should have been genuinely entered into on and after date when tax concession was announced by introduction of relevant Bill in Lok Sabha. It has now been decided that approvals under section 80-O would not be denied on this ground. In other words, para 3(iii) of Circular dated 23-12-1975 may be treated as deleted. (ii) In para (ix) of said circular, it was mentioned that consideration for use of trade-mark would be outside scope of section 80-O. It has now been decided that payments made for use of trade-marks, are of nature of royalty, and, therefore, fall within scope of section 80-O. (iii) It was also stated in para 3(ix) of circular dated 23- 12-75 that in case of composite agreement which specified consolidated amount as consideration for purposes which included matters outside scope of section 80-O, Board may not approve such agreement for purposes of section 80-O of Act if it was not possible to properly ascertain and determine amount of consideration relatable to provision of know- how or technical services, etc., qualifying for section 80-O. Thus, benefit of section 80-O could be denied to entire amount of royalty, commission, fees, etc., receivable under such agreement. It has since been decided that in such cases approval would be granted by Board subject to suitable disallowance for non-qualifying services, after taking into consideration totality of agreement, so balance of royalty/fees, etc., which is for services covered by section 80-O, can be exempted. (emphasis in bold supplied) 14.4 There had been several other modifications of Section 80-O from time to time. relevant aspects noticeable for present purpose are that extent of deduction under Section 80-O was also altered from time 50 to time and it even came to be allowed 100 per cent. but, by Finance Act, 1984, it was reduced to 50 per cent. of referred income. Then, requirement of approval by CBDT was substituted by Finance Act, 1988 to approval by Chief Commissioner or Director General. However, by Finance (No. 2) Act of 1991, even that requirement was deleted. In fact, Finance (No. 2) Act of 1991 brought about sea of changes in Section 80- O whereby, first and second provisos were omitted and above- mentioned clause (iii) of Explanation was inserted. words or person (other than company) who is resident in India were also inserted by this very Finance (No. 2) Act of 1991 expanding reach of Section 80-O even to non-corporate tax payers. Moreover, earlier expressions technical services were also altered to technical or professional services . There is no gainsaying fact that Finance (No. 2) Act of 1991 led to considerable recasting of Section 80-O of Act of 1961 with substantial expansion of its ambit and area of coverage. These amendments were made applicable from assessment year 1992-93 onwards and obviously, this had been reason that assessees like appellant, who had earlier been taking benefit of deduction under Section 80HHC with reference to their earning of foreign exchange, attempted to shift, for purpose of deduction, to this provision of Section 80-O. effect of amendments to Section 80-O by Finance (No. 2) Act of 1991 was also explained by revenue in its Circular No. 621 dated 19.12.1991, relevant part whereof could be extracted as under:- 51 Circular No. 621, dated 19th December, 1991:- Extending scope of deduction in respect of income from royalties, commission, technical fee, etc. ---37. Under existing provisions of section 80-0 of Income-tax Act, Indian company, deriving income by way of royalties, commission, fees etc., from foreign Government or foreign enterprise in consideration of provision of technical know-how or technical services under approved agreement, is entitled to deduction, in computing its taxable income, of amount equal to 50 per cent. of such income provided such income is received in, or brought into, India in convertible foreign exchange. 37.1 With view to bringing this provision on parity with other tax concessions for export sector and also as measure of rationalisation, benefit under section 80-0 has been extended to non-corporate tax payers resident in India. concession will now also be available in relation to professional services as well as for services rendered to foreign enterprise from India. Further, requirement of prior approval of tax authorities in this regard has been done away with. 37.2 This amendment will take effect from 1st April, 1992 and will, accordingly, apply in relation to assessment year 1992--93 and subsequent years. **** **** **** 14.5 There had been several further clarifications concerning Section 80- O, as refurbished by Finance (No. 2) Act of 1991; and one such clarification by revenue had been by way of Circular No. 700 dated 23.03.1995, which has been strongly relied upon by learned senior counsel for appellant. relevant contents of this circular could also be extracted as follows:- Circular No. 700, dated 23rd March, 1995 Deduction under section 80-O of Income-tax Act, 1961 Clarification regarding.- Section 80-O of Income-tax Act,1961, provides for deduction of 50% from income of Indian resident by way of royalty, commission, fees or any similar payment from foreign Government or enterprise: 52 (a) in consideration for use outside India of any patent, invention, model, design, secret formula or process, etc.; or (b) in consideration of technical or professional services rendered or agreed to be rendered outside India to such foreign Government or enterprise. In either case, requirement is that income should be in convertible foreign exchange. 2. 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. 3. question has been raised as to whether benefit of section 80-O would be available if technical and professional services, though rendered outside India, are used by foreign Government or enterprise in India. 4. matter has been considered by Board. It is clarified that as long as technical and professional services are rendered from India and are received by foreign Government or enterprise outside India, deduction under section 80-O would be available to person rendering services even if foreign recipient of services utilises benefit of such services in India. 5. contents of this circular may be given wide publicity and brought to notice of all subordinate authorities under your charge for information and necessary action. 14.6 In summation of what has been noticed hereinabove, it turns out that with objectives of giving impetus to functioning of Indian industries to provide intellectual property or information concerning industrial, commercial or scientific knowledge to foreign countries so as to augment foreign exchange earnings of our country and at same time, earning goodwill of Indian technical know-how in foreign countries, provisions like Section 85-C earlier and Section 80-O later were inserted to Act of 1961. Noteworthy it is that from time to time, 53 ambit and sphere of Section 80-O were expanded and even dealings with foreign Government or foreign enterprise were included in place of foreign company as initially provided. requirement of approval by Central Government of any such arrangement was also modified and was ultimately done away with. Significantly, while initially benefit of Section 80-O was envisaged only for Indian company but later on, it was also extended to person other than company, who is resident of India. extent of deduction had also varied from time to time. 14.7. Broadly speaking, few major and important factors related with Section 80-O of Act of 1961, with reference to its background and its development, make it clear that tax incentive for imparting technical know-how and akin specialities from our country to foreign countries ultimately took shape in manner that earning of foreign exchange, by way of imparting intellectual property, or furnishing information concerning industrial, commercial, scientific knowledge, or rendering of technical or professional services to foreign Government or foreign enterprise, was made eligible for deduction in computation of total income, to tune of 50 per cent. of income so received. finer details like those occurring in Explanation (iii) of Section 80-O were also taken care of by providing that services envisaged by Section 80-O ought to be rendered outside India but they may be rendered from India , while making it clear that services which are rendered in India would not qualify for such deduction. 54 relevant principles for interpretation 15. Having thus taken note of annals and historical perspectives of development of Section 80-O of Act and relevant parts of circulars issued by department from time to time in tune with such developments, we may now examine principles for interpretation and application of this provision. In this regard, as noticed, it has been argued on behalf of appellant, with reference to decisions in Baby Marine Exports and B. Suresh (supra), that incentive provision like Section 80- O of Act has to be construed purposively, broadly and liberally so as to achieve its avowed object to earn foreign exchange. Per contra, it has been contended on behalf of revenue, with reference to Constitution Bench decision in Dilip Kumar & Co. (supra), that taxing statutes are subject to rule of strict interpretation, and benefit of ambiguity in case of exemption notification or exemption clause must go in favour of revenue; and same principles would apply in relation to Section 80-O of Act. 15.1. So far decision in case of B. Suresh (supra) is concerned, it does not appear necessary to dilate on same because question involved therein was entirely different that is, as to whether foreign exchange earned by transferring right of exploitation of films outside India by way of lease was admissible for deduction under Section 80HHC of Act, where department attempted to contend that movies/films were 55 not goods. However, having regard to submissions made, we may look at ratio from other cited decisions in requisite details. Baby Marine Exports 16. question that came up for determination before this Court in case of Baby Marine Exports (supra) was as to whether export house premium received by assessee was includible in profits of business while computing deduction under Section 80HHC? 16.1. assessee in case of Baby Marine Exports was engaged in business of selling marine products both in domestic market and was also exporting it to direct buyers as also through export houses. Contracts with export houses were entered into where assessee received entire FOB value of exports plus export house premium of 2.25% of FOB value. While claiming deduction under Section 80HHC of Act, this export house premium was also shown as part of total turnover, as being part of sale consideration and not commission or service charge; and deduction was claimed accordingly. AO rejected such claim for deduction with reference to clause 12 of agreement and with observation that such premium was clearly commission or service charge. Appellate Authority held that what assessee received was only reimbursement of certain expenses or payments towards commission or brokerage, falling within ambit of clause 1 of Explanation (baa) to Section 80HHC. However, ITAT allowed appeal of assessee by accepting stand that export house premium was includible in profits of business 56 while computing deduction under Section 80HHC and that export house premium was nothing but integral part of sale price realised by assessee and could not have been taken as either commission or brokerage. appeal by revenue was dismissed by High Court while following its earlier decision on same point. 16.2. In further appeal by revenue, this Court observed, inter alia, with reference to other decisions in Sea Pearl Industries v. CIT Cochin: 2001(127) ELT649(SC) and IPCA Laboratory Ltd. v. Dy. Commissioner of Income Tax, Mumbai: (2004) 266 ITR521(SC) that Section 80HHC was incorporated with object of granting incentive to earners of foreign exchange and this section must receive liberal interpretation. This Court also observed with reference to decision in Bajaj Tempo Ltd. v. Commissioner of Income Tax, Bombay: (1992) 196 ITR188(SC) that we must always keep object of Act in view while interpreting Section. legislative intention must be foundation of court's interpretation . 16.3. However, noticeable it is that in Baby Marine Exports, ultimately this Court upheld claim of assessee for deduction under Section 80HHC of Act not by way of any liberal or extended meaning to provision, but only on its plain construction with reference to definition of term supporting manufacturer in that provision and its direct application to facts of case as would distinctly appear from following passages (at pp. 334-335 of ITR):- According to section 80HHC(1), export house in computing its total income is entitled to deduction to 57 extent of profit derived by assessee from export of goods or merchandise. Whereas, according to section 80HHC(1A), supporting manufacturer shall be entitled to deduction of profit derived by assessee from sale of goods or merchandise. term "supporting manufacturer" has been defined in this section and it reads as under: supporting manufacturer means person being Indian company or person (other than company) resident in India, manufacturing (including processing), goods or merchandise and selling such goods or merchandise to Export House or Trading House for purposes of export : According to said definition, respondent clearly comes within purview of supporting manufacturer. On plain construction of section 80HHC(1A) assessee being supporting as manufacturer shall be entitled to deduction of profit derived by assessee from sale of goods or merchandise. respondent - supporting manufacturer sold goods or merchandise to export house and received entire FOB value of goods plus export house premium of 2.25 per cent. of FOB value. relevant clause 12 of agreement has already been extracted in earlier part of judgment and according to said clause, export house is under obligation to pay to supporting manufacturer incentive of 2.25 per cent. on F.O.B. value according to terms of agreement. respondent, supporting manufacturer, admittedly sold goods to export house in respect of which export house has issued certificate under proviso to sub-section (1). According to section, respondent - assessee, in computing total income be allowed deduction to extent of profits referred to in sub-section (1B) derived by assessee from sale of goods to export house. Appellate Tribunal has arrived at definite conclusion that Export House premium is nothing but integral part of sale price realized by assessee - supporting manufacturer from Export House. Tribunal further held that Export House premium cannot possibly be considered to be either commission or brokerage, as person cannot earn commission or brokerage for himself. High Court has upheld findings of Tribunal. In our considered view, order of Appellate Tribunal is based on proper construction of section 80HHC(1A) of 58 Income-tax Act that Export House premium is integral part of sale price realized by assessee from export house. *** *** *** submission of appellant that premium earned by respondent assessee is totally unrelated to export is fallacious and devoid of any merit. This submission of appellant is also contrary to specific terms of agreement between appellant and respondent. On plain construction of section 80HHC(1A), respondent is clearly entitled to claim deduction of premium amount received from export house in computing total income. export house premium can be included in business profit because it is integral part of business operation of respondent which consists of sale of goods by respondent to export house. (emphasis in bold supplied) Dilip Kumar & Co. 17. core question referred for authoritative pronouncement to Constitution Bench in case of Dilip Kumar & Co. (supra) was as to what interpretative rule should be applied while interpreting tax exemption provision/notification when there is ambiguity as to its applicability with reference to entitlement of assessee or rate of tax? reference to Constitution Bench was necessitated essentially for reason that in few decisions, one of them by 3-Judge Bench of this Court in case of Sun Export Corpn. v. Collector of Customs: (1997) 6 SCC 564, proposition came to be stated that any ambiguity in tax provision/notification must be interpreted in favour of assessee who is claiming benefit thereunder.14 14 In Sun Export Corpn. v. Collector of Customs, (1997) 6 SCC 564 Court had stated law as follows (at page 568) : Even assuming that there are two views possible, it is well settled that one favourable to assessee in matters of taxation has to be preferred. 59 17.1. In Dilip Kumar & Co., Constitution Bench of this Court examined several of past decisions including that by another Constitution Bench in CCE v. Hari Chand Shri Gopal: (2011) 1 SCC 236 as also that by Division Bench of this Court in case of UOI v. Wood Papers Ltd.: (1990) 4 SCC 256 wherein, principles were stated in clear terms that question as to whether subject falls in notification or in exemption clause has to be strictly construed; and once ambiguity or doubt is resolved by interpreting applicability of exemption clause strictly, Court may construe exemption clause liberally. This Court found that in Wood Papers Ltd. (supra), some of observations in earlier decision in case of CCE v. Parle Exports (P) Ltd.: (1989) 1 SCC 345 were also explained with all clarity. This Court noted enunciations in Wood Paper Ltd. with total approval as could be noticed in following:- 46. In judgment of two learned Judges in Union of India v. Wood Papers Ltd.: (1990) 4 SCC 256 (hereinafter referred to as Wood Papers Ltd. case , for brevity), distinction between stage of finding out eligibility to seek exemption and stage of applying nature of exemption was made. Relying on decision in CCE v. Parle Exports (P) Ltd. : (1989) 1 SCC 345, it was held: (Wood Papers Ltd. case, SCC p. 262, para 6) 6. Do not extend or widen ambit at stage of applicability. But once that hurdle is crossed, construe it liberally. reasoning for arriving at such conclusion is found in para 4 of Wood Papers Ltd. case, which reads: (SCC p. 260) 4. Literally exemption is freedom from liability, tax or duty. Fiscally, it may assume varying shapes, specially, in growing economy. For instance tax holiday to new units, concessional rate of tax to goods or persons for limited period or with specific objective, etc. That is why its construction, unlike charging provision, has to be 60 tested on different touchstone. In fact, exemption provision is like exception and on normal principle of construction or interpretation of statutes it is construed strictly either because of legislative intention or on economic justification of inequitable burden or progressive approach of fiscal provisions intended to augment State revenue. But once exception or exemption becomes applicable no rule or principle requires it to be construed strictly. Truly speaking liberal and strict construction of exemption provision are to be invoked at different stages of interpreting it. When question is whether subject falls in notification or in exemption clause then it being in nature of exception is to be construed strictly and against subject, but once ambiguity or doubt about applicability is lifted and subject falls in notification then full play should be given to it and it calls for wider and liberal construction. (emphasis supplied) *** *** *** 58. In above passage, no doubt this Court observed that: (Parle Exports case, SCC p. 357, para 17) 17. when two views of notification are possible, it should be construed in favour of subject as notification is part of fiscal enactment. This observation may appear to support view that ambiguity in notification for exemption must be interpreted to benefit subject/assessee. careful reading of entire para, as extracted hereinabove would, however, suggest that exception to general rule of tax has to be construed strictly against those who invoke for their benefit. This was explained in subsequent decision in Wood Papers Ltd. case. In para 6, it was observed as follows: (SCC p. 262) 6. In CCE v. Parle Exports (P) Ltd., this Court while accepting that exemption clause should be construed liberally applied rigorous test for determining if expensive items like Gold Spot base or Limca base or Thums Up base were covered in expression food products and food preparations used in Item No. 68 of First Schedule of Central Excises and Salt Act and held that it should not be in consonance with spirit and reason of law to give exemption for non-alcoholic beverage basis under notification in question . Rationale or ratio is same. Do not extend or widen 61 ambit at stage of applicability. But once that hurdle is crossed construe it liberally. Since respondent did not fall in first clause of notification there was no question of giving clause liberal construction and hold that production of goods by respondent mentioned in notification were entitled to benefit. 59. above decision, which is also decision of two- Judge Bench of this Court, for first time took view that liberal and strict construction of exemption provisions are to be invoked at different stages of interpreting it. question whether subject falls in notification or in exemption clause, has to be strictly construed. When once ambiguity or doubt is resolved by interpreting applicability of exemption clause strictly, Court may construe notification by giving full play bestowing wider and liberal construction. ratio of Parle Exports case deduced as follows: (Wood Papers Ltd. case, SCC p. 262, para 6) 6. Do not extend or widen ambit at stage of applicability. But once that hurdle is crossed, construe it liberally. 60. We do not find any strong and compelling reasons to differ, taking contra view, from this. We respectfully record our concurrence to this view which has been subsequently, elaborated by Constitution Bench in Hari Chand case. (emphasis in bold supplied) 17.2. Constitution Bench decision in Hari Chand Shri Gopal (supra) was also taken note of, inter alia, in following:- 50. We will now consider another Constitution Bench decision in CCE v. Hari Chand Shri Gopal (hereinafter referred as Hari Chand case , for brevity). We need not refer to facts of case which gave rise to questions for consideration before Constitutional Bench. K.S. Radhakrishnan, J., who wrote unanimous opinion for Constitution Bench, framed question viz. whether manufacturer of specified final product falling under Schedule to Central Excise Tariff Act, 1985 is eligible to get benefit of exemption of remission of excise duty on specified intermediate goods as per Central Government Notification dated 11-8-1994, if captively consumed for manufacture of final product on ground that records 62 kept by it at recipient end would indicate its intended use and substantial compliance with procedure set out in Chapter 10 of Central Excise Rules, 1994, for consideration? Constitution Bench answering said question concluded that manufacturer qualified to seek exemption was required to comply with preconditions for claiming exemption and therefore is not exempt or absolved from following statutory requirements as contained in Rules. Constitution Bench then considered and reiterated settled principles qua test of construction of exemption clause, mandatory requirements to be complied with and distinction between eligibility criteria with reference to conditions which need to be strictly complied with and conditions which need to be substantially complied with. Constitution Bench followed ratio in Hansraj Gordhandas case, to reiterate law on aspect of interpretation of exemption clause in para 29 as follows: (Hari Chand case, SCC p. 247) 29. law is well settled that person who claims exemption or concession has to establish that he is entitled to that exemption or concession. provision providing for exemption, concession or exception, as case may be, has to be construed strictly with certain exceptions depending upon settings on which provision has been placed in statute and object and purpose to be achieved. If exemption is available on complying with certain conditions, conditions have to be complied with. mandatory requirements of those conditions must be obeyed or fulfilled exactly, though at times, some latitude can be shown, if there is failure to comply with some requirements which are directory in nature, non-compliance of which would not affect essence or substance of notification granting exemption. *** *** *** (emphasis in bold supplied) 17.3. In view of above and with reference to several other decisions, in Dilip Kumar & Co., Constitution Bench summed up principles as follows:- 66. To sum up, we answer reference holding as under: 63 66.1. Exemption notification should be interpreted strictly; burden of proving applicability would be on assessee to show that his case comes within parameters of exemption clause or exemption notification. 66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, benefit of such ambiguity cannot be claimed by subject/assessee and it must be interpreted in favour of Revenue. 66.3. ratio in Sun Export case is not correct and all decisions which took similar view as in Sun Export case stand overruled. (emphasis in bold supplied) 17.4. Obviously, generalised, rather sweeping, proposition stated in case of Sun Export Corporation (supra) as also in other cases that in matters of taxation, when two views are possible, one favourable to assessee has to be preferred, stands specifically disapproved by Constitution Bench in Dilip Kumar & Co. (supra). It has been laid down by Constitution Bench in no uncertain terms that exemption notification has to be interpreted strictly; burden of proving its applicability is on assessee; and in case of any ambiguity, benefit thereof cannot be claimed by subject/assessee, rather it would be interpreted in favour of revenue. 18. It has been repeatedly emphasised on behalf of appellant that Section 80-O of Act is essentially incentive provision and, therefore, needs to be interpreted and applied liberally. In this regard, we may observe that deductions, exemptions, rebates et cetera are different species of incentives extended by Act of 1961 15. In other words, incentive is 15 As tersely put by this Court in Liberty India v. CIT: (2009) 9 SCC 328, Act of 1961 broadly provides for two types of tax incentives, namely, investment-linked incentives and profit-linked incentives. Chapter VI-A which provides for incentives in form of tax deductions essentially 64 generic term and deduction is one of its species; exemption is another. Furthermore, Section 80-O is only one of provisions in Act of 1961 dealing with incentive; and even as regards incentive for earning or saving foreign exchange, there are other provisions in Act, including Section 80HHC, whereunder appellant was indeed taking benefit before assessment year 1993 94. 19. Without expanding unnecessarily on variegated provisions dealing with different incentives, suffice would be to notice that proposition that incentive provisions must receive liberal interpretation or to say, leaning in favour of grant of relief to assessee is not approach countenanced by this Court. law declared by Constitution Bench in relation to exemption notification, proprio vigore, would apply to interpretation and application of any akin proposition in taxing statutes for exemption, deduction, rebate et al., which all are essentially form of tax incentives given by Government to incite or encourage or support any particular activity16. 20. principles laid down by Constitution Bench, when applied to incentive provisions like those for deduction, would also be that burden lies on assessee to prove its applicability to his case; and if there be any ambiguity in deduction clause, same is subject to strict interpretation with result that benefit of such ambiguity cannot be claimed by belong to category of profit-linked incentives (at p. 339). 16 Of course, there may be other objectives also like supporting any particular class of persons e.g., those contained in Section 80TTB of Act (for deduction in respect of interest on deposits in case of senior citizen) or Section 80U of Act (for deduction in case of differently abled person). 65 assessee, rather it would be interpreted in favour of revenue. In view of Constitution Bench decision in Dilip Kumar & Co. (supra), generalised observations in Baby Marine Exports (supra) with reference to few other decisions, that tax incentive provision must receive liberal interpretation, cannot be considered to be sound statement of law; rather applicable principles would be those enunciated in Wood Papers Ltd. (supra), which have been precisely approved by Constitution Bench. Thus, at and until stage of finding out eligibility to claim deduction, ambit and scope of provision for purpose of its applicability cannot be expanded or widened and remains subject to strict interpretation but, once eligibility is decided in favour of person claiming such deduction, it could be construed liberally in regard to other requirements, which may be formal or directory in nature. 21. As noticed, Section 80-O of Act has unique purpose and hence, peculiarities of its own. Applying aforesaid principles to enquiry for purpose of claim of deduction under Section 80-O of Act as applicable to present case, evident it is that for purpose of eligibility, service or activity has to precisely conform to what has been envisaged by provision read with its explanation; and other requirements of receiving convertible foreign exchange etc., are also to be fulfilled. It is only after that stage is crossed and particular activity falls within ambit of Section 80-O, this provision will apply with full force and may be given liberal application. basic question, therefore, would 66 remain as to whether suggested activity of appellant had been of rendering such service from India to its principals in foreign country which answers to description provided by provision. As regards this enquiry, nothing of any liberal approach is envisaged. activity must strictly conform to requirements of Section 80-O of Act. 22. At this juncture, we are impelled to deal with segment of submissions on behalf of appellant with reference to decision in case of Abhiram Singh (supra). It has been argued that this Court has cautioned against making fortress out of dictionary but High Court has relied heavily on text and dictionary rather than object of provision. In our view, this part of criticism on behalf of appellant on approach of High Court is entirely inapt and rather unnecessary. referred observations in majority view in Abhiram Singh s case occurred in relation to interpretation of Section 123(3) of Representation of People Act, 1951, which is aimed at curbing unwarranted tendencies of communalism during election campaign and operates in entirely different fields of social welfare and ethos of democracy. 22.1. It remains trite that any process of construction of written text primarily begins with comprehension of plain language used. In such process of comprehension of statutory provision, meaning of any word or phrase used therein has to be understood in its natural, ordinary or grammatical meaning unless that leads to some absurdity or unless 67 object of statute suggests to contrary. 17 In context of taxing statute, requirement of looking plainly at language is more pronounced with no room for intendment or presumption.18 In this process, if natural, ordinary or grammatical meaning of any word or phrase is available unquestionably and fits in scheme and object of statute, same could be, rather need to be, applied. other guiding rules of interpretation would be internal aides like definition or interpretation clauses in statute itself. Yet further, if internal aides do not complete comprehension, recourse to external aides like those of judicial decisions expounding meaning of words used in construing statutes in pari materi, or effect of usage and practice etc., is not unknown; and in this very sequence, it is accepted principle that when word is not defined in enactment itself, it is permissible to refer to dictionaries to find out general sense in which word is understood in common parlance. In 17 In Principles of Statutory Interpretation by Justice G.P. Singh (14 th edn.at p. 91) this elementary rule of literal construction has been stated with reference to scores of decisions, including that in Crawford v. Spooner : (1846) 4 MIA 179 as follows: words of statute are first understood in their natural, ordinary or popular sense and phrases and sentences are construed according to their grammatical meaning, unless that leads to some absurdity or unless there is something in context, or in object of statute to suggest contrary. 18 Apart from principles already noticed hereinbefore, profitable it would be to point out that basic principles of interpretation of taxing statutes have been re-condensed by this Court in CIT v. Yokogawa India Ltd.: (2017) 391 ITR 274 (SC) as follows : cardinal principles of interpretation of taxing statutes centres around opinion of Rowlatt, J. in Cape Brandy Syndicate v. Inland Revenue Commissioners which has virtually become locus classicus. above would dispense with necessity of any further elaboration of subject notwithstanding numerous precedents available inasmuch as evolution of all such principles are within four corners of following opinion of Rowlatt, J.: (Cape Brandy case, KB p. 71) in taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at language used. 68 fact, for purpose of gathering ordinary meaning of any expression, recourse to its dictionary meaning is rather interlaced in literal rule of interpretation. This aspect was amply highlighted and expounded by Constitution Bench of this Court in case of Commissioner of Wealth- Tax, Andhra Pradesh v. Officer-in-Charge (Court of Wards), Paigah: (1976) 105 ITR 133 as follows (at p.137 of ITR) : 8 . It is true that in Raja Benoy Kumar Sahas Roy's case: [1957] 32 ITR 466(SC) this court pointed out that meanings of words used in Acts of Parliament are not necessarily to be gathered from dictionaries which are not authorities on what Parliament must have meant. Nevertheless, it was also indicated there that where there is nothing better to rely upon, dictionaries may be used as aid to resolve ambiguity. ordinary dictionary meaning cannot be discarded simply because it is given in dictionary. To do that would be to destroy literal rule of interpretation. This is basic rule relying upon ordinary dictionary meaning which, in absence of some overriding or special reasons to justify departure, must prevail. . (emphasis in bold supplied) 22.2. In setup of present case, for proper comprehension of contents and text of relevant provision of Section 80-O and Explanation (iii), which are carrying even minute distinction of expressions from India and in India , recourse to lexical semantics has been inevitable. However, in all fairness, High Court has not only discussed semantics and dictionary meanings but, has equally looked at object and purpose of Section 80-O of Act. Hence, without further expanding on this issue, suffice it to say for present purpose that submissions against approach of High Court with reference to decision in Abhiram Singh (supra) does not advance cause of appellant. 69 Interpretation and application of Section 80-O of Act of 1961 in referred decisions 23. Having thus taken note of provision applicable as also principles for its interpretation, we may now take note of relevant decisions wherein claim for deduction under Section 80-O of Act has been dealt with by Courts in given fact situations and in particular set of circumstances. J.B. Boda & Co. 24. decision of this Court in J.B. Boda & Co. (supra) has been rather mainstay of contentions urged on behalf of appellant. 24.1. In case of J.B. Boda & Co., appellant was engaged in brokerage business as reinsurance broker. appellant had been arranging for reinsurance of portion of risk with various reinsurance companies either directly or through foreign brokers against which, it was receiving percentage of premium received by foreign companies as its share of brokerage. With respect to reinsurance business, appellant contacted M/s Sedgwick Offshore Resources Ltd. (London brokers) and furnished all details about risk involved etc., and confirmation about assignment was informed to appellant. Following this, Indian ceding company handed over premium to be paid by it to foreign reinsurance company to appellant for onward transmission. Appellant approached RBI showing amount payable after deducting its brokerage amount; and this amount of brokerage was claimed to be receipt of convertible foreign exchange without corresponding foreign 70 remittance with reference to provision contained in Section 9 of Foreign Exchange Regulation Act. However, respondent revenue took stand that agreements of appellant could not be approved for purpose of Section 80-O of Act, for income having been generated in India and not received in foreign currency. This was unsuccessfully challenged by assessee before High Court and hence, matter was in appeal before this Court. 24.2. It is at once clear that in J. B. Boda & Co., question, as to whether foreign exchange received by assessee in lieu of services to foreign company was eligible for deduction under Section 80-O of Act or not, did not even arise. This was because of fact that activity of assessee was, in fact, accepted by CBDT to be eligible for deduction under Section 80-O of Act in its Circular No. 731 dated 20.12.1995 and only issue sought to be raised against assessee by revenue related to method of receiving amount by assessee. In said Circular, it was provided by revenue that receipt of brokerage by reinsurance agent in India from gross premia before remittance to is foreign principals will also be entitled to deduction under Section 80-O of Act . This Court noted contents of said Circular dated 20.04.1995; and two paragraphs therein with emphasis supplied by this Court could be usefully reproduced as under (at p. 280 of ITR):- CIRCULAR NO. 731 DATED 20-12-1995 *** *** *** 71 2. Reinsurance brokers, operating in India on behalf of principals aboard are required to collect reinsurance premia from ceding insurance companies in India and remit same to their principals. In such cases, brokerage can be paid either by allowing brokers to deduct their brokerage out of gross premia collected from Indian insurance companies and remit net premia overseas or they could simply remit gross premia and get back their brokerage in form of remittance through banking channels. *** *** *** 4. matter has been examined. condition for deduction under section 80-O is that receipt should be in convertible foreign exchange. When commission is remitted aboard, it should be in currency that is regarded as convertible foreign exchange according to FERA. Board are of view that in such cases receipt of brokerage by reinsurance agent in India from gross premia before remittance to his foreign principals will also be entitled to deduction under section 80-O of Act. (emphasis in italics in original) 24.2.1. This Court found said Circular binding on revenue and also found meaningless insistence of revenue on formal remittance to foreign reinsurer and receiving commission from them. This Court observed that such two way traffic was unnecessary because in end result, income was generated in India in foreign exchange in lawful and permissible manner. Hence, this Court concluded on matter while disapproving stand of revenue as follows (at p. 281 of ITR):- facts brought out in this case are clear as to how remittance to foreign reinsurance company is made through Reserve Bank of India in conformity with agreement between appellant and foreign reinsurers, and that remittance statement filed along with annexure which evidences that amount due to foreign reinsurers as also brokerage due to appellant and balance due to foreign reinsurers is remitted (and expressed so) in dollars. It is common ground that entire transaction effected through medium of Reserve Bank 72 of India is expressed in foreign exchange and in effect retention of fee due to appellant is in dollars for services rendered. This, according to us, is receipt of income in convertible foreign exchange. It seems to us that "two way traffic" is unnecessary. To insist on formal remittance to foreign reinsurers first and thereafter to receive commission from foreign reinsurer, will be empty formality and meaningless ritual, on facts of this case. On perusal of nature of transaction and in particular statement of remittance filed in Reserve Bank of India regarding transaction, we are unable to uphold view of respondent that income under agreement is generated in India or that amount is one not received in convertible foreign exchange. We are of view that income is received in India in convertible foreign exchange, in lawful and permissible manner through premier institution concerned with subject-matter--the Reserve Bank of India. In this view, we hold that proceedings of Central Board of Direct Taxes dated March 11, 1986, declining to approve agreements of appellant with Sedgwick Offshore Resources Ltd., London, for purposes of section 80-O of Income-tax Act, are improper and illegal. We declare so. We direct respondent to process agreements in light of principles laid down by us hereinabove. appeal is allowed. There shall be no order as to costs. 24.3. Though it has been painstakingly contended on behalf of appellant that decision in J.B. Boda & Co. should be decisive of matter because even brokerage of reinsurance broker was held eligible for deduction under Section 80-O of Act but, we are afraid, said decision has no relevance whatsoever to question at hand. eligibility of concerned services of reinsurance broker for purpose of Section 80-O was not even question involved therein. Needless to observe that business of insurance carries its own peculiarities where factor of risk involved is of unique significance; and any information and assessment of risk involved is itself specialised task related with 73 business of insurance. In fact sheet of case in J.B. Boda & Co., in every opening paragraph of judgment, it has been distinctively recorded that in respect of insurance risk covered by Indian or foreign insurance companies, appellant had been arranging for reinsurance of portion of risk with various reinsurance companies either directly or through foreign brokers. As regards, services of appellant with broker in London, Court noted, inter alia, that appellant furnished all details about risk involved, premium payable, period of coverage and portion of risk which is sought to be reinsured . Without entering into further details of activities of said assessee, suffice it to say for present purpose that submissions on behalf of appellant, as if task of broker of reinsurance is not technical in nature, could only be rejected as being not in conformity with peculiarities of insurance business. In any case, as observed hereinbefore, this aspect does not require further elaboration because of entirely different question involved and decided by this Court in J.B. Boda & Co. E.P.W. Da Costa 25. Apart from case of J.B. Boda & Co., much sustenance is sought on behalf of appellant with reference to decision in E.P.W. Da Costa (supra), which was decision rendered by Delhi High Court and was, admittedly, not appealed against. 25.1. Facts of case of E.P.W. Da Costa (supra) had been that British Broadcasting Corporation ( BBC ) was interested in knowing how its 74 broadcasts were received by listeners in India and hence, engaged services of petitioner for conducting public opinion survey so that after gathering information from petitioner, it would make modifications in its programmes. agreement was entered by petitioner with BBC for conducting specialised economic and public opinion research on all-India basis to assess attitudes of wide range of political, social and economic subjects etc. Approval of this agreement for purpose of Section 80-O of Act was refused by CBDT, essentially on ground that service (of audience research study in Hindi speaking areas to assess radio listening habits) was rendered in India and information supplied to foreign party was not type contemplated by Section 80- O. 25.2. In said decision, of course, question of nature of services for purpose of Section 80-O was involved but, High Court precisely found activity of assessee to be that of imparting scientific knowledge after proper analysis of voluminous data collected. While rejecting contention on behalf of revenue, Court observed as under (at p. 755 of ITR):- Mr. Kirpal further contends that information communicated by petitioner to BBC is only data and not scientific or commercial knowledge. Perhaps data may be distinguished from knowledge inasmuch as data may be mere masses of information which is not properly analysed and made intelligible, while knowledge is analysed and presented for understanding. information supplied by petitioner to BBC must fall in second category or else BBC would not have entered into agreement with 75 petitioner for supply of information. mere mass of information without analysis and without being understandable would not be of use to BBC. information is not, therefore, mere data but scientific knowledge. (emphasis in bold supplied) 25.3. Reference to this decision in case of E.P.W. Da Costa also suffers from same shortcomings as we have commented in relation to decision in J.B. Boda & Co. appellant would suggest that assessee in case of E.P.W. Da Costa was merely compiling data and forwarding it to BBC. Court has precisely pointed out that it was not merely collection of data but it was analysis thereof that was root of agreement between principal and assessee. Again, statistics and statistical analysis is matter of specific branch of science. In elaborate discussion as regards science of statistics with reference to activity of assessee, Court, inter alia, observed as under (at pp. 754-755 of ITR):- petitioner issues questionnaire to listeners and information gathered from answers to questionnaire is compiled in form of various statistical tables. According to Webster's New International Dictionary, Vol. III, statistics is science dealing with collection, analysis, interpretation and presentation of masses of numerical data and that it is branch of mathematics. It would appear, therefore, that statistical tables compiled by petitioner after analysing masses of numerical data are commercial or scientific knowledge which is made available to BBC. For, word " science " is also very general word. Since statistics is science according to Webster's, even in more particular sense, statistical information may be said to be scientific knowledge within meaning of s. 80-O. If commercial or scientific knowledge is confined to mean abstract exposition of commercial or scientific theories then only 76 book on commercial or scientific subject may be regarded as scientific knowledge. But knowledge may be general or particular. Such knowledge as was compiled, classified and made useful for use of BBC may also be said to be commercial or scientific knowledge. BBC is commercial corporation. Its function may be to disseminate information, but in discharge of this function it requires commercial or scientific knowledge as to way its broadcasts are received in different countries. Such highly organized concern as BBC would not be content with general information as to receipt of its broadcast in India. information would have to be specific, particular and analysed according to languages in which broadcasts are made and according to classes of public who listen to such broadcasts. In view of trend to give wider meaning to words " science and scientific knowledge ", it would not be possible to restrict connotation of these words too narrowly. In our view they would include statistical tables compiled by petitioner for use of BBC inasmuch as statistics itself has been recognised as science. (emphasis in bold supplied) 25.4 decision in E.P.W. Da Costa, again, does not make out any case in favour of appellant. B. L. Passi 26. In counter to contentions on behalf of appellant, decision by Coordinate Bench of this Court in case of B.L. Passi (supra) has been strongly relied upon by revenue but is sought to be distinguished on behalf of appellant with submissions that therein, no material at all was produced by assessee. We may examine this case also with necessary specifics. 26.1. relevant facts of case in B.L. Passi had been that Japanese enterprise, Sumitomo Corporation, Japan, was interested in supplying dies for manufacturing of body parts to Indian automobile 77 manufacturers and agreement was entered with appellant (who claimed having vast experience in Indian automobile industry) whereunder, appellant was to provide services which involved passing of industrial and commercial knowledge, information about market conditions and Indian manufacturers of automobiles and also technical assistance as required, so as to assist principal in establishing its business in Indian automobile industry. appellant claimed deduction under Section 80-O of Act with reference to remuneration received on account of such services rendered to foreign enterprise. AO disallowed claim of appellant for deduction with finding that services in question do not qualify for deduction. However, Appellate Authority ruled in favour of appellant but ITAT reversed order of Appellate Authority and decision of ITAT was upheld by High Court. 26.2. In further appeal, this Court briefly took note of background of insertion of Section 80-O in Act of 1961 in place of former Section 85-C with object of giving fiscal encouragement to Indian industries to provide technical know-how and technical services to newly developing countries and foreign companies to augment foreign exchange of our country and to establish reputation of Indian technical know-how for foreign countries. Examining facts of case relating to assessment year 1997-98, this Court found that though appellant had exchanged several letters with its principal, but information was in form of some blueprints and there was nothing on record to show as to how 78 blueprints were obtained and dispatched; and such blueprints were not produced by assessee on record. This Court also found that said assessee was to receive service charges at rate of five per cent. of contributable amount from sale of principal s products to its customers in India but again, there was nothing on record to prove that any product was developed on basis of blueprints supplied by assessee or that principal was able to sell any product developed by it by using information supplied by assessee. Thus, this Court found that there was no material on record to prove that sales in question were of any product developed with assistance of information by assessee and equally, there was no material on record to show as to how service charges payable to assessee were computed. This Court, inter alia, observed and found as under (at pp 26-28 of ITR) :- Now coming to facts of case at hand, it is evident from record that major information sent by appellant to Sumitomo Corporation was in form of blueprints for manufacture of dies for stamping of doors. Several letters were exchanged between parties but there is nothing on record as to how this blueprint was obtained and dispatched to aforesaid company. It is also evident on record that appellant has not furnished copy of blueprint which was sent to Sumitomo Corporation neither before Assessing Officer nor before appellate authority nor before Tribunal. provisions of section 80-O of Income-tax Act mandate production of document in respect of which relief has been sought. We, therefore, have to examine whether services rendered in form of blueprints and information provided by appellant fall within ambit of section 80-O of Income-tax Act or any of conditions stipulated therein in order to entitle assessee to claim deduction. *** *** *** 79 blueprints made available by appellant to Corporation can be considered as technical assistance provided by appellant to Corporation in circumstances if description of blueprints is available on record. said blueprints were not even produced before lower authorities. In such scenario, when claim of appellant is solely relying upon technical assistance rendered to Corporation in form of blueprints, its unavailability creates doubt and burden of proof is on appellant to prove that on basis of those blueprints, Corporation was able to start up their business in India and he was paid amount as service charge. Further, with regard to remuneration to be paid to appellant for services rendered, in terms of letter dated January 25, 1995, it has been specifically referred that remuneration would be payable for commercial and industrial information supplied only if business plans prepared by appellant results positively. Sumitomo Corporation will pay to PASCO International service charges equivalent to 5 per cent. of contractual amount between Sumitomo and its customers in India on sales of its products so developed. From perusal of above, it is clear that appellant was entitled to service charges at rate of 5 per cent. of contractual amount between Sumitomo Corporation and its customers in India on sales of its products so developed but there is nothing on record to prove that any product was so developed by Sumitomo Corporation on basis of blueprints supplied by appellant as also that Sumitomo Corporation was able to sell any product developed by it by using information supplied by appellant. Meaning thereby, there is no material on record to prove sales effected by Sumitomo Corporation to its customers in India in respect of any product developed with assistance of appellant s information and also on as to how service charges payable to appellant were computed. In view of foregoing discussion, we are of considered opinion that in present facts and circumstances of case, services of managing agent, i.e., appellant, rendered to foreign company, are not technical services within meaning of section 80-O of Income-tax Act. appellant failed to prove that he rendered technical 80 services to Sumitomo Corporation and also relevant documents to prove basis for alleged payment by Corporation to him. letters exchanged between parties cannot be claimed for getting deduction under section 80-O of Income-tax Act. (emphasis in bold supplied) 26.3. case of B.L. Passi (supra) had not been matter where nothing at all was on record. Indeed letters exchanged by assessee with principal were on record, but core of information that was allegedly supplied by assessee to foreign company, was not furnished, nor it was shown as to how that information was utilized by foreign company and further, it was also not shown as to how service charges payable to assessee were computed when it was to get payment on basis of sale to be made by foreign company. These crucial facts and factors directly co-relate with requirements of Section 80-O of Act; and upon assessee failing to meet with such requirements, claim for deduction under Section 80-O failed. Thomas Kurian 27. Thomas Kurian (supra) had been another case where, for want of any specific material to connect activity/service of assessee with Section 80-O, assessee was held to be merely inspector or certifier for purpose of export as follows:- 6. On reading of above provisions what we notice is that assessees service is certainly professional services which are covered by provisions of Act. However, two conditions have to be satisfied for eligibility for deduction under Section 80-O, first is that service should be rendered outside India and second one is that payment for such services should be received in convertible foreign 81 exchange in India. In this case only one condition is satisfied, ie, receipt of consideration in convertible foreign exchange and so far as rendering of service is concerned, entire service is rendered by assessee in India and no services is rendered outside India. Exporter ships goods only with assessee s certificate of fitnesses so that foreign buyer cannot reject goods. Assessee s communication with foreign buyers in our view does not amount to rendering of service outside India. Continental Construction Ltd. 28. As noticed, in present case, in very first place, Assessing Officer, while dealing with assessment in question, raised queries and sought clarifications from appellant with reference to enunciations in decision of this Court in case of Continental Construction (supra). Then, High Court has also noticed in its impugned judgment that this was one of decisions relied upon by learned counsel for assessee. comment has been made in reply submissions on behalf of revenue before us that appellant has given up reliance on this decision for reasons that ratio essentially operates against appellant. response on behalf of appellant has been that reference to this decision by revenue was entirely unnecessary for same not being relied upon. Needless to observe that it being decision of this Court, ratio and principle emanating therefrom cannot be ignored, whether relied upon by appellant or not. Moreover, said decision has been rendered by 3-Judge Bench of this Court and has force of binding precedent. Having regard to submissions 82 made and questions raised, reference to decision of this Court in case of Continental Construction (supra) is indispensable. 28.1 Briefly put, relevant factual aspects of matter in Continental Construction had been that assessee was civil construction company that had executed large number of projects overseas and in India. assessee entered into eight contracts for construction, inter alia, of dam and irrigation project in Libya, fibre-board factory at Abu Sukhair in Iraq and huge Karkh Water Supply Project in Baghdad. For these contracts, assessee obtained approval of CBDT in terms of Section 80-O. In its claim for deduction, various issues related with different assessment years were raised, which included applicability of CBDT s approval and nature of activities of assessee, as also question as to whether assessee was entitled to claim deduction only under Section 80HHB of Act and not under Section 80-O of Act? wide range of issues raised in matter were dealt with by this Court, all of which are not necessary to be dilated upon. 28.2. relevant aspect of matter is that regarding eligibility for deduction under Section 80-O of Act, in Continental Construction, this Court said that eligibility of item to tax or tax deduction could hardly be made dependent on label given to it by parties. Thus, assessee was not entitled to claim deduction under Section 80-O regarding certain receipts merely because they were described as royalty, fees or commission; and at same time, absence of any specific label to item 83 was not destructive of right of assessee to claim deduction. This Court pointed out that contracts of type envisaged by Section 80-O are usually very complex and cover multitude of obligations and response; and it is not always possible for parties to dissect consideration and apportion it to various ingredients or elements. This Court, however, pointed out that consolidated receipts and responses were always apportionable. In context, as regards activities of said assessee and entitlement under Section 80-O of Act, this Court observed that contracts in question obliged assessee to make available information and render services to foreign Government of nature outlined under Section 80-O and therefore, it was duty of revenue and right of assessee to see that consideration legitimately attributable to such information and services is apportioned and assessee is given benefit of deduction under Section 80-O to extent of such consideration. This aspect of matter, extensively dealt with by this Court, could be usefully extracted as under (at p. 119 of ITR): - In our view, neither of propositions contended for by Sri Ahuja can be accepted as correct. So far as first proposition is concerned, it is sufficient for us to point out that it is well-settled principle that eligibility of item to tax or tax deduction can hardly be made to depend on label given to it by parties. As assessee cannot claim deduction under section 80-O in respect of certain receipts merely on basis that they are described as royalty, fee or commission in contract between parties. By same token, absence of specific label cannot be destructive of right of assessee to claim deduction, if, in fact, consideration for receipts can be attributed to sources indicated in section. second proposition is equally untenable. Contracts of type envisaged by section 80-O 84 are usually very complex ones and cover multitude of obligations and responsibilities. It is not always possible or worthwhile for parties to dissect consideration and apportion it to various ingredients or elements comprised in contract. cases referred to by Tribunal and Sri Ahuja as to indivisibility of contract arose in entirely different context. For purposes of income-tax, principle of apportionment has always been applied in different contexts. Consolidated receipts and expenses have always been considered apportionable in contexts: (a) of capital and revenue constituents comprised in them; (b) portions of expenditure attributable to business and non-business purposes; (c) of places of accrual or arisal; and (d) of agricultural and non-agricultural elements in such receipts or payments. This is point that does not need much elaboration and it is sufficient to refer to decided cases cited under passages on this topic at pp. 47, 137, 264, 621 and 677 of Kanga and Palkhivala s Law and Practice of Income Tax (Volumne I, eighth edition). We are, therefore, of opinion that, if, as we have held, contracts in present case oblige assessee to make available information and render services to foreign Government of nature outlined in section 80-O, it is duty of Revenue and right of assessee to see that consideration paid under contract legitimately attributable to such information and services is apportioned and assessee given benefit of deduction available under section to extent of such consideration. (emphasis in bold supplied) 28.3. It is also significant to notice that in Continental Construction, this Court took note of aforesaid circulars of CBDT dated 23.12.1975 and 30.04.1979 and delineated functions of Assessing Officer with reference to claim for deductions under Section 80-O even when approval had been granted by Board in following passage (at p. 133 of ITR) :- We should, however, make it clear that our conclusion does not mean deprivation of all functions of Assessing Officer while making assessment on 85 applicant. Officer has to satisfy himself (i) that amounts in respect of which relief is claimed are amounts arrived at in accordance with formula, principle or basis explained in assessee's application and approved by Board; (ii) that deduction claimed in relevant assessment year relates to items, and is referable to basis, on which application for exemption was asked for and granted by Board; (iii) that receipts (before 1975 amendment) were duly certified by accountant or that, thereafter, amounts have been received in or brought into India in convertible foreign exchange within specified period. second of these functions is, particularly, important as approval for exemption granted in principle has to be translated into concrete figures for purposes of each assessment. Neither introduction of words "in accordance with and subject to provisions of these sections" nor various "conditions" outlined in letter of approval add anything to or detract anything from scope of approval. 28.4. few aspects at once emerge from said decision in Continental Construction that even under provisions of Section 80-O of Act as then existing, whereunder prior approval of CBDT was required to claim deduction, this Court underscored that deduction would be available only in relation to consideration attributable to information and services envisaged by Section 80-O and deduction would be granted to extent of such consideration; and all these aspects were to be examined by Assessing Officer while making assessment. Khursheed Anwar 29. In impugned judgment, decision of High Court of Madras in case of Khursheed Anwar (supra) has also been taken note of. Therein too, claim for deduction under Section 80-O of Act was declined for want of necessary material while observing that benefit of 86 Section 80-O cannot be claimed by merely asking for same; it has to be substantiated with requisite record. In said case, on query of Assessing Officer, assessee had submitted its reply but could not furnish material so as to bring case within four corners of Section 80-O of Act. High Court, inter alia, observed as under (at p. 474 of ITR): Having regard to above discussions, in our view, as assessee has not established his claim for deduction by producing relevant records, Tribunal has erred in reversing finding of Commissioner of Income-tax (Appeals) rendered on basis that assessee was not entitled to benefit in view of fact that commission received by assessee was not for any of activities mentioned in paragraph 4.1 of order of Commissioner of Income-tax (Appeals). There is absolutely no reason adduced by Tribunal to reverse said finding. We must also mention here that during course of arguments, as we found that there were no supporting materials for claim, we directed assessee's counsel to produce materials, if any, available for our perusal. learned counsel for assessee, though had produced explanation of assessee dated March 28, 1998, he was unable to produce any materials to sustain any of contentions made in said letter. In absence of any materials to show that what was passed on to foreign enterprise was information concerning with commercial or technical or scientific aid, merely because agreement is entered into between assessee and foreign enterprise, we are not inclined to accept claim of deduction under section 80-O of Act. Accordingly, second substantial question of law is answered in favour of revenue and against assessee. tax case appeal is allowed in part. No costs. 30. From decisions aforesaid, it could be immediately culled out that for bringing any particular foreign exchange receipt within ambit of Section 80-O for deduction, it must be consideration attributable to information and service contemplated by Section 80-O; and in case of 87 contract involving multiple or manifold activities and obligations, every consideration received therein in foreign exchange will not ipso facto fall within ambit of Section 80-O. It has to be attributable to information or service contemplated by provision and only that part of foreign exchange receipt, which is so attributable to activity contemplated by Section 80-O, would qualify for claiming deduction. Such enquiry is required to be made by Assessing Officer; and for purpose of this imperative enquiry, requisite material ought to be placed by assessee to co-relate foreign exchange receipt with information/service referable to Section 80-O. Evidently, such enquiry by Assessing Officer could be made only if concrete material is placed on record to show requisite co- relation. Whether appellant is entitled claim deduction under S. 80-O 31. Coming to facts of present case, agreements of appellant with foreign entities primarily show that appellant was to locate source of supply of referred merchandise and inform principals; to keep liaison with agencies carrying out organoleptic/bacteriological analysis and communicate result of inspection; to make available to foreign principals analysis of seafood supply situation and prices; and to keep foreign principals informed of latest trends in market and also to negotiate and finalise prices. As per agreements, in lieu of such services, appellant was to receive agreed commission on invoice amounts. 88 32. In contrast to what has been observed in cases of J.B. Boda & Co. (advising on risk factor related to proposed insurance/reinsurance) and E.P.W. Da Costa (dealing with statistical analysis of data collected), what turns out as regards activities/services of appellant is that appellant was essentially to ensure supply of enough quantity of good quality merchandise in proper packing and at competitive prices to satisfaction of principals. This has essentially been job of procuring agent. Though expressions expert information and advice , analysis , technical guidance etc., have been used in agreements but, these expressions cannot be read out of context and de hors purpose of agreement. All clauses of agreements read together make it absolutely clear that appellant was merely procuring agent and it was his responsibility to ensure that proper goods are supplied in proper packing to satisfaction of principal. All other services or activities mentioned in agreements were only incidental to its main functioning as agent. Significantly, payment to appellant, whatever label it might have carried, was only on basis of amount of invoice pertaining to goods. There had not been any provision for any specific payment referable to so-called analysis or technical guidance or advice. Viewed from any angle, services of appellant were nothing but of agent, who was procuring merchandise for its principals; and such services by appellant, as agent, were rendered in India. Even if certain information was sent by assessee to 89 principals, information did not fall in category of such professional services or information which could justify its claim for deduction under Section 80-O of Act. In other words, in holistic view of terms of agreements, we have not iota of doubt that appellant was only procuring agent, as rightly described by High Court. 33. If at all any doubt yet remains about nature of services of appellant, same is effectively quelled by default clauses in agreements in question. We may recapitulate default clauses in referred agreements, which read as under:- agreement with HOKO Article 4: HOKO pays to RC-CN 0.7% of invoice amount on C & F basis and US$ 2,000.00 per month as commission. When quality of goods is found to be unsatisfactory to HOKO after inspection in in Japan, HOKO shall have no responsibility to pay agent fee. agreement with GELAZUR When quality and packaging of goods are found to be unsatisfactory to GELAZUR after inspection in FRANCE, GELAZURE, shall have no responsibility regarding payment of Agent s fee. 33.1. In both agreements, default clauses make it more than clear that if quality of goods was found to be unsatisfactory to principals after inspection in their respective countries, they shall have no responsibility to pay agent s fees. If at all it had been matter of appellant furnishing some technical or material information which served foreign enterprises in making decision for procurement, in ordinary circumstances, after completion of such service and its utilization 90 by foreign enterprises, appellant was likely to receive professional service charges for furnishing such information but, contrary and converse to it, agreements provide for no payment to appellant in case of principal being dissatisfied with goods. These default clauses effectively demolish case of appellant and fortify submissions of revenue that appellant was merely procuring agent and nothing more. 34. matter can be viewed from yet another angle, as indicated by High Court in last paragraph of its judgment. If at all it be assumed that out of various tasks mentioned in agreements, some of them involved such services which answered to requirements of Section 80- O, it was definitely required of appellant to establish as to what had been such information of special nature or of expertise that was given by it and how same was utilised, if at all, by foreign enterprises; and how much of foreign exchange receipt was attributable to such special service. Obviously, appellant did not supply such particulars. As noticed, High Court posed pointed query to learned counsel appearing for appellant as to whether all services mentioned in agreement would come within purview of Section 80-O. cryptic response to this query on behalf to appellant had been that if recipient of services is situated outside, all services rendered by assessee in terms of agreement come within sweep of provision . It was specifically contended on behalf of appellant that 91 establishing which of its services qualifies for deduction is of no consequence, rather unnecessary . In our view, this response was not in conformity with requirements of Section 80-O of Act, as explained and applied by this Court in Continental Construction and in B. L. Passi (supra) as also as applied by Madras High Court in Khursheed Anwar (supra). Rather, this stand, in our view, puts final curtain on appellant s case because most of services in agreements in question were those of agent ensuring supply; and if any part of services co-related with Section 80-O, particulars were of utmost significance and were fundamentally necessary which appellant had never supplied. Merely for having contract with foreign enterprise and mere earning foreign exchange does not ipso facto lead to application of Section 80-O of Act. 35. effect of Circular No.700 dated 23.03.1995 is only to extent that once service is rendered from India , even if its ultimate use by foreign enterprise occurs in India, matter may not go out of Section 80- O of Act. This clarification is in tune with nature of this provision meant for extending incentive but it does not do away with basic requirements that to qualify for deduction under Section 80-O, service must be rendered from India to foreign enterprise and nature of service ought to be as delineated in Section 80-O. Ultimate use of service could be in India, as illustrated by case of E.P.W. Da Costa (supra) and by cases of Li & Fung and Chakiath Agencies (supra) that were cited before 92 High Court. However, claim of appellant fails at threshold for reasons foregoing. Circular No.700 dated 23.03.1995 is neither of any application to this case nor of any assistance to appellant. appellant is not entitled to claim deduction under Section 80-O of Act. 36. For what we have discussed hereinabove, it is also apparent that Appellate Authority as also ITAT had viewed present case from altogether wrong angle. As noticed, Appellate Authority even did not comprehend observations in E.P.W. Da Costa (supra) and assumed that every information is scientific knowledge. On facts, Appellate Authority observed that even if acting as agent of foreign enterprises, appellant was locating sources of frozen seafoods, bringing foreign enterprises in contact with manufacturers or processors of seafood, and negotiating with local packers; and these activities, though carried out in India, had been on behalf of foreign enterprises. ITAT, though took note of different services contemplated by agreements in question and even observed that clauses like those requiring appellant to settle claim with manufacturers might be services rendered in India but then, proceeded to assume, without any cogent material on record, that other services were rendered from India and on that basis, foreign party took its decision. Even in this regard, questions relevant and germane to enquiry were not even gone into inasmuch as, it was not examined as to what and which part of consideration was attributable to services envisaged by Section 80-O of Act, which 93 were rendered from India. Therefore, findings of Appellate Authority and ITAT, being based on irrelevant considerations while ignoring relevant aspects, were neither of binding nature nor could have been decisive of matter. Hence, neither anything turns upon submissions made on behalf of appellant with reference to decision in K. Ravindranathan Nair (supra) nor this aspect requires any further discussion. 37. In our view, High Court has rightly analysed entire matter with reference to relevant questions and has rightly proceeded on law applicable to case. impugned judgment calls for no interference. appellant M/s Laxmi Agencies - appeal arising out of SLP (Civil) No.23699 of 2016. 38. This appeal involves similar claim of other assessee firm M/s Laxmi Agencies, said to be engaged in similar business of rendering services to foreign buyers of Indian marine products. For assessment year 1997-98, this assessee firm, while declaring total income of Rs. 31,81,180/-, claimed deduction under Section 80-O to tune of Rs.21,84,302/-, being 50% of net income of Rs. 43,68,604/- towards service charges received from such foreign buyers. 38.1. In assessment order dated 31.01.2000, AO noted explanation of this appellant regarding services rendered in following: 94 ..As per detailed letter dated 22.11.1999 filed by assessee services rendered by it to foreign enterprises are by way of : 1. To impact commercial and technical knowledge, experience and skill in field of Frozen Food/Marine products to enable them to formulate their policies and take decision for import thereof from India; 2. To locate reliable sources of quality and assured supply of Frozen Seafood/Marine products and communicate assessee s expert opinion and advise to them to enable them to take decisions for import from India; 3. To keep close liaison with agencies such as EIA/Llyods/ SGS especially for organoleptic/bacteriological analysis and communicate results of inspection along with assessee s expert comments and advice. This also enables foreign enterprises to take decisions for import from various sources from several countries available to them. 4. Making available full and detailed analysis of seafood situation and prices for above purpose. 5. To advise and keep informed foreign buyers of latest trends/process applications in manufacturing and all valuable commercial and economic information which will directly and indirectly assist them to organize, develop, control on regulate their import business from India. 6. To assist foreign buyers in negotiating and finalizing prices for Indian marine products and advise them of all rules and regulations and other related information for such import. In case of this appellant, again, AO was of view that services were rendered in India and service charges received from foreign enterprises in respect of such services did not qualify for deduction under Section 80-O. 38.2. In case of this appellant, Appellate Authority examined terms of agreements with foreign enterprises in detail and noted contents thereof in following paragraphs:- 95 2.The appellant had entered into agreement with various foreign enterprises for render following services. Article 2 of agreement entered into with Neptune Fisheries Ind. USA reads as under:- (a) Locating reliable source of quality and assured supply of frozen sea-foods/marine products for purpose of import by NEPTUNE and communicate its expert opinion and advice to NEPTUNE; (b) In addition to above services rendered by Laxmi it will also keep close liason with agencies such as ELA/LLOYDS/SGS especially for organolotic/acteriological analysis and communicate result of inspection along with its expert comments and advice. (c) Making available full and detailed analysis of sea food supply situation and prices; (d) To advise NEPTUNE and keep them informed of latest trends/processes applications in manufacturing and of all valuable commercial and economic information about markets, Government Policies, exchange fluctuations, banking laws which will directly or indirectly assist NEPTUNE to organize, develop control or regulate their import business from India. e) To negotiate and finalise prices for India Exporters of frozen marine products and to communicate such and other related information to NEPTUNE . Article 4 of agreement states: LAXMI shall also do everything that is required to ensure highest standards of quality hygiene and freshness of products including supervision at various stages. 3. agreement made with other principles (sic- principals) are also on similar lines. 38.3. In this case, of course, Appellate Authority took note of various activities of appellant with and for buyer concerned and, while disallowing 20% of service charges received from foreign enterprises towards services rendered in India, allowed deduction under Section 80-O to extent of net income arising out of 80% of such charges received from foreign enterprises. 96 38.4. order so passed by Appellate Authority was challenged both by appellant and by revenue before ITAT in ITA No. 580/Coch/2004 and ITA No. 618/Coch/2004 respectively. ITAT referred to its earlier decision in case of other assessee Ramnath & Co. (as referred to hereinabove) and following same, allowed appeal of appellant and dismissed that of revenue and thereby, allowed claim of appellant for deduction in toto. 38.5. Although, from fact sheet of this case, it does not appear if agreements of this appellant also carried default clauses as we have noticed in lead case but, on all other major features, agreements had been of same nature and again, this appellant has also failed to bring any material on record to show if it had received any specific consideration referable to activities envisaged by Section 80-O of Act. In given set of facts and circumstances, this appellant also turns out to be only procuring agent and not beyond. Hence, this appeal also deserves to be dismissed. Conclusion 39. For what has been discussed and held hereinabove, these appeals fail and are, therefore, dismissed. No costs. J. (A.M.KHANWILKAR) J. (DINESH MAHESHWARI) New Delhi, Dated: 5th June, 2020. 97 Ramnath & Co. v. Commissioner of Income-tax