Commissioner of Income Tax, Chennai vs South India Corporation (Agencies) Ltd.

P.D. Dinakaran, J.—The above appeal has been preferred by the revenue against the order of the income tax Appellate Tribunal, Madras ''C'' Bench, dated 30-11-2006 made in ITA No. 1778/Mds/2002, raising the following substantial questions of law.

(i) whether in the facts and circumstances of the case, the Tribunal was right in holding that the assessee is entitled to deduction u/s 80-O in respect of amounts received from its foreign principals for services rendered within the territorial waters of India?

(ii) Whether in the facts and circumstances of the case, Tribunal was right in holding that the appeal cannot be entertained as no appeal was filed in respect of the earlier year''s order of the Commissioner of income tax (Appeals)?

The assessee filed its return for the assessment year 1994-95 claiming deduction u/s 80-O of the Act with respect to the foreign inward remittances for the services rendered by it to foreign vessels in Indian Ports. The Assessing Officer holding that the services were rendered only when the ships were in Indian territorial waters and, therefore, it did not satisfy the requisite conditions stipulated in section 80-O of the Act, disallowed deduction.

1.1. On appeal at the instance of the assessee, the Commissioner of income tax (Appeals) allowed the appeal following the earlier orders.

1.2. Enraged by the order of the Commissioner, the revenue preferred an appeal before the income tax Appellate Tribunal. The Tribunal, holding that the services rendered by the assessee satisfied the conditions of section 80-O of the Act read with para 4 of the CBDT Circular No. 700, dated 23-3-1995 and that no appeal was filed by the revenue against the earlier orders of the Commissioner, dismissed the appeal. Aggrieved by the same, the revenue has preferred the present appeal.

In this regard, it would be apposite to refer the relevant portion of the CBDT Circular No. 700, dated 23-3-1995, which reads as under:

...It is clarified that as long as the technical and professional services are rendered from India and are received by a foreign Government or enterprise outside India, deduction u/s 80-O would be available to the person rendering the services even if the foreign recipient of the services utilizes the benefit of such services in India.

In the instant case, it is not in dispute that the services offered by the assessee were utilized by foreign shipping company at or near ports in India. Such services are aimed not only to facilitate the shipping companies inward journey to India, but also outside journey and further operations in high seas outside India. Therefore, the services offered by the assessee satisfy the conditions stipulated in section 80-O of the Act and, accordingly, the assessee is entitled to deduction u/s 80-O of the Act, as per the CBDT circular No. 700, dated 23-3-1995. Concededly, the revenue had not challenged the earlier year''s orders of the Commissioner by preferring an appeal and the same is not disputed by the learned counsel for the revenue. Therefore, we are of the considered opinion that the Tribunal had rightly held that the appeal cannot be entertained.

Finding no substantial question of law arises for our consideration, the appeal is dismissed.