ORDER
K.P.T. Thangal, Judicial Member
1. This appeal by the revenue is for the assessment year 1993-94. The grievance of the revenue is that the Commissioner (Appeals) erred in directing the Assessing Officer to allow deduction under Section 80-O in respect of service charges received by the assessee from certain foreign enterprises. According to the revenue, the assessee is merely an agent of the foreign enterprises in India. The assessee’s only role is to act on behalf of the foreign principals within the limits allowed by them. In terms of the agreements between the assessee and the foreign enterprises, according to the revenue, the Commissioner (Appeals) should have noted that the services rendered by the assessee are services rendered in India and such services cannot be construed as services rendered from India. The facts leading to the dispute are briefly as under.
2. The assessee filed the return of income for the year under consideration on 29-10-1993 declaring total income at Rs. 6,21,710. The return was processed under Section 143(1)(a). Subsequently, the case was selected for scrutiny, and notice under Section 143(2) was issued. The assessee is a firm engaged in providing commercial services to foreign enterprises. In its return the assessee claimed deduction of a sum of Rs. 22,39,825 under Section 80-O for the following services rendered :
(i) Locating reliable source of quality and assured supply of frozen sea-foods for the purpose of import by the foreign enterprises and communicating its expert opinion and advice to the foreign enterprises.
(ii) The assessee has to keep a close liaison with-agencies such as EIA/LLOYS/SGA for bacteriological analysis and communicate the result of the inspection along with the expert comments and advice.
(iii) Making available full and detailed analysis of the sea-foods supply situation and prices.
(iv) To advise the foreign enterprises and keep them informed of the latest trends application in manufacturing and information about their markets which would directly affect or indirectly assist the foreign enterprises to organise, develop or regulate their import business.
(v) To negotiate and finalise the prices for Indian Exporters of frozen marine products and to communicate such other related information to the foreign enterprises.
For the above services, the assessee was entitled to service charges, and for the year under consideration, the service charges received amounted to Rs. 44,79,649. The assessee claimed 50% of such receipts as deduction amounting to Rs. 22,39,824. The Assessing Officer noticed that from the assessment year 1992-93 onwards, the assessee had claimed deduction under Section 80-O for the services rendered in pursuance of certain agreements between the assessee and the foreign enterprises. The Assessing Officer held that to claim the benefit under Section 80-O, the assessee had not fulfilled the following conditions :
(i) The assessee must be an Indian company or a resident noncorporate assessee.
(ii) The income by way of royalty, commission, fees etc. received should be from a foreign enterprise/government.
(iii) The consideration shall be for the use outside India of patent, invention etc. made available or provided to such enterprises by the assessee for technical/professional services rendered or agreed to be rendered outside India.
(iv) For such services income is received in convertible foreign exchange in India by the assessee.
(v) 50% of such income so received in or brought into India is allowed as deduction.
Relying upon the decision of the Bombay High Court in the case of Searle (India) Ltd. v. CBDT[1984] 145 ITR 673, the Assessing Officer held that the assessee had not fulfilled all the conditions to claim the benefit under Section 80-O as the assessee had rendered technical services in India and not from India. The Assessing Officer noted that after the amendment to the section made applicable with effect from the assessment year 1992-93 onwards, the concession of the section is also available in relation to professional services. He also noted that for claiming the benefit under Section 80-O, the assessee had to satisfy the conditions laid down in the Board’s Circular No. 700 dated 23-3-1995. As per this Circular, as long as technical and professional services are rendered from India and are received by foreign company outside India, deduction under Section 80-O can be claimed. In the case of the assessee, the Assessing Officer noticed that the functions/activities carried out by the assessee are almost or more or less same as were done prior to the assessment year 1992-93 for which the assessee had claimed deduction under Section 80HHC. In order to decide whether the assessee is entitled to claim the benefit under Section 80-O, the Assessing Officer asked for the following clarifications:
(1) The location of services rendered by the assessee may be mentioned if there are any services rendered outside India.
(2) Whether the technical/professional services rendered by the assessee were utilised by the foreign enterprises anywhere in India or outside India independently of the assessee.
(3) Whether the technical/professional services rendered by the assessee were utilised by the foreign enterprises, in India, independently and without the assessee.
(4) To clarify whether the technical/professional services rendered by the assessee are capable or being made use of by the foreign enterprises independently and without the assessee.
Vide its letter dated 19-2-1996, the assessee replied as follows :
(1) The technical/professional services rendered by us are from India.
(2) Foreign buyers to whom we have rendered these services are located in Japan, USA, U.K. and France. None of these foreign enterprises have utilised our services in any part of India. But the entire benefit of our services were utilised by them in effectively distributing and marketing the Indian sea-foods in their respective countries.
(3) We would like to emphasise that the foreign enterprises have no place of business in India nor do they market any goods or services in India.
(4) Without our services the import of marine products from India by the foreign enterprises will not be possible.
The Assessing Officer felt that the reply of the assessee did not fully answer the queries made by him. Hence, the matter was referred to the Asstt. Commissioner of Income-tax for instructions under Section 144A. Instructions were also sought as to whether Section 45(4) is applicable to the assessee. The assessee has categorised the services rendered by it to the foreign enterprises as follows :
(i) Locating reliable source of quality and assured supply of frozen sea-foods for the purpose of import by the foreign enterprises and communicating its expert opinion and advice to the foreign enterprises;
(ii) The assessee has to keep a close liaison with agencies such as EIA/LLOYS/SGS for bacteriological analysis and communicate its result of the inspection along with the expert comments and advice ;
(iii) Making available full and detailed analysis of the sea-foods supply situation and prices ;
(iv) To advise the foreign enterprises and keep them informed of the latest trends, application in manufacturing and information about their markets which would directly affect or indirectly assist the foreign enterprises to organise, develop or regulate their import business;
(v) To negotiate and finalise the prices for Indian Exporters of frozen marine products and to communicate such other related information to the foreign enterprises.
It was claimed by the assessee that the services were rendered outside India but from India. It was also pointed out that none of the foreign enterprises were having any office or branch in India, and the information furnished by the assessee was utilised by the foreign enterprises outside India, but from India. After going through the agreements entered into between the assessee and some of the foreign enterprises to find out the nature of the relationship inter se, the Assessing Officer came to the conclusion that the agreements with the other foreign enterprises are such that the assessee acted as an agent of the foreign enterprises in India in the matter of procurement of marine products from India. All the services rendered are incidental to the agreement of carrying out all primary functions of acting as an Agent. On behalf of the foreign principal the assessee carries out technical guidance for processing and for quality control, inspection of the products and also keeps close liaison work with other agencies. These are definitely rendered in India but the Assessing Officer held that such services could not be construed as services rendered from India only on the ground that the foreign principals are advised of the results and that they are stationed outside India. The information passed on by the assessee was of general nature i.e. regarding the materials, markets, govt. policies, exchange fluctuations, banking laws, prices paid by competitors, monthly supplies of sea-food data, etc. Commissions were payable as a percentage of C&F value of the imports by the foreign principals. Therefore, he held that “the assessee is only an agent of the foreign enterprises in the matter of procurement of marine products from India and all the services envisaged in the agreements are incidental to the carrying out of the main function as agent”. He also took note of the fact that the representatives of the foreign enterprises often visited India i.e. stations such as Calcutta, Bombay, Vizag, Madras, Cochin, Calicut, etc. He further held that “by any standard of imagination, it cannot be claimed that the services rendered on the occasions of the visit of the representatives of foreign enterprises were not rendered in India”. In the circumstances, he held that the services which the assessee rendered cannot come under the category of services that can be rendered from India, and to qualify for deduction under Section 80-O, services rendered should be such that they were capable of being rendered outside India also. Therefore according to the Assessing Officer, these are services rendered in India and not from India. The mere fact that the foreign enterprises utilised the benefit of the services rendered outside India will not make the assessee eligible to claim the deduction under Section 80-O. For the above proposition, the Assessing Officer relied on the decision of the Bombay High Court reported in Eastman Consultants (P.) Ltd. v. CBDT[1981] 132 ITR 637′ and also the decision in the case of Searle (India) Ltd. (supra). Aggrieved by the above order, the assessee approached the first appellate authority.
3. It was contended before the Commissioner (Appeals) that Section 80-O is an incentive section, and the same, therefore, should be interpreted in a way that it encourages the Indian residents to earn foreign exchange by rendering services to foreign enterprises. For the above proposition, the assessee relied on the decision of the Hon’ble Supreme Court in the case of Bajaj Tempo Ltd. v. CIT [1992] 196 ITR 1882. It was because of the efforts of the assessee that valuable foreign exchange was earned. Foreign enterprises purchased marine products from India, and within a short period the turnover of the assessee grew from Rs. 20 crores in 1991 -92 to Rs. 100 crores in 1996-97. The assessee rendered services like imparting and conveying technical and commercial information and benefit of knowledge, experience and skill which enable the foreign buyers to take decisions as to when, whether and how much they should import from India. These are, according to the learned counsel for the assessee, services rendered from India. The word ‘from’ itself suggests that same activities will be carried out in India but the services will be made available for use outside India. The learned counsel for the assessee distinguished ‘activities’ from ‘services’. According to him, the activity becomes a service to the foreign buyer when the result of the activity is communicated to him in such a manner that he can formulate his import policy. The difference between ‘the services rendered in India’ and ‘the services rendered from India’ should be looked at from the objective point of view. A narrow, superficial and legalistic approach would only defeat the object of the section, he submitted. It was further submitted that whether the assessee could be described as an agent is not relevant for deciding the issue as the use of the word ‘Commission’ in Section 80-O clearly suggests that even agents will be covered by Section 80-O. The real issue was the nature of the services and not the capacity in which the services were rendered. In this connection, the assessee relied on the decision of the Delhi High Court in the case of Oberoi Hotels (India) (P.) Ltd. v. CBDT[1982] 135 ITR 257′ and the decision of the Tribunal (Delhi Bench-D) in the case of Capt. K.C. Saigal v. ITO [1995] 54 ITD 488. It was further submitted that the mode and manner of the payment, whether as a percentage of C&F value of import or not, do not determine its character. Very often royalty and technical fees are paid as a percentage of turnover. The assessee’s counsel relied on the Circular of the Board bearing No. 700 dated 23-3-1995. It was further submitted that none of the services rendered by the assessee was of the nature incapable of being rendered outside India. The service does not become service unless it is communicated to the recipient for being put to use. Reliance was placed on the decision of the Delhi High Court in the case of E.P. W. Da Costa v. Union of India [1980] 121 ITR 751. The CIT (Appeals) held that the assessee was not merely passing on information without analysis to the foreign parties, and as such, these should be treated as services rendered from India. The assessee has located reliable source of quality and assured supply of frozen sea-food to the various foreign enterprises in Japan, France and other countries and supplied information regarding sea-food processing, manufacturing details and also Government policies, exchange fluctuations, etc. to the foreign enterprises. These are services rendered from India and not services rendered in India. Aggrieved by the above, order, Revenue is in appeal before the Tribunal.
4. The learned Departmental Representative has submitted that the agreement entered into between the assessee and the foreign enterprise is one of agency. There is no information made available to the foreign principal for use outside India. The assessee himself uses this information in India. The foreign principal occasionally visits India to satisfy himself whether the agency conditions have been complied with. The assessee agent has not developed or has any information concerning industrial, commercial or scientific knowledge or skill in the field’ of sea-food products. In order to claim the benefit under Section 80-O the assessee should have already developed any patent, invention, model or secret formulae etc. or similar information concerning industrial, commercial or scientific knowledge, experience or skill. Nothing of this sort has been exclusively developed by the assessee. The assessee only identifies the processors with whom the assessee enters into agreements for export of sea-food items as per the existing quality control standards. The assessee has not developed any new information that is claimed to have been exported from India. Whatever knowledge of the existing business of seafood items the assessee had has been employed or used in India for procuring sea-food from the processors for export to the principals. There are not services rendered by the assessee outside India. The case relied on by the assessee reported in Continental Construction Ltd. v. CIT [1992] 195 ITR 81 (SC) is distinguishable on facts. In this case the assessee had technical competence, expertise and experience and the assessee made them available to the foreign company for use outside India. In the instant case of the assessee there is no technical competence and no imparting of the knowledge. Even if there is imparting, it is used in India by the assessee, and therefore, it is not a service rendered outside India or from India. The commission receipt as envisaged in Section 80-O is different from payment of commission which is conditional upon the satisfactory quality of the goods. The nature of the asset etc. may be varied and the consideration may assume multifarious forms. The receipt in Section 80-O has to fall into two categories-
(i) in consideration for use outside India of any patent etc. and
(ii) in consideration for technical services rendered outside India.
The payment has to be in consideration of one of the two types of transaction. In the instant case, the payment is not made in consideration of either of these. In the instant case, the assessee itself utilises whatever skill, knowledge or know-how it possesses for its own purposes of purchasing the marine products and exporting the same to the foreign customers. The foreign customers have never utilised the assessee’s skill, know-how or experience for making purchases from a third country. So, the entire knowledge or know-how the assessee possessed has been fully utilised by the assessee itself in India. Hence, the assessee is not entitled for deduction under Section 80-O as per Clause (iii) of Section 80-O(1). The decision relied on by the assessee in the case of E.P. W. Da Costa (supra) is also distinguishable. In that case BBC used the information to broadcast to India. The information was collected by the party concerned and handed over to them. In the instant case, the assessee has not clarified and the CIT (Appeals) has not considered whether the receipt is in consideration for imparting information or for rendering services. According to the learned departmental representative, the decision of the Tribunal (Delhi Bench-C) in the case of Capt. K.C. Saigal(supra) is also distinguishable on facts.
5. The learned representative for the assessee has submitted that Section 80-O is an incentive section which aims at encouraging Indian residents to earn valuable foreign exchange by rendering services to foreign enterprises. While interpreting such an incentive section, liberal approach should be adopted as explained by the Hon’ble Supreme Court in the case of Bajaj Tempo Ltd. (supra). The Supreme Court held that a taxing provision aimed at granting incentives for promoting growth and development should be interpreted and considered liberally so as to advance the objectives of the provisions and not to frustrate or defeat the intention. The assessee’s representative also relied on the decision of the Bombay High Court in the case of Gannon Dunkerley & Co. Ltd. v. CBDT [1986] 159 ITR 1621 for the above proposition. Relying upon the Board’s Circular No. 700 dated 23-3-1995, the learned representative of the assessee has submitted that it is wrong to say that the services rendered outside India are only to be taken note of to give the benefit of Section 80-O. The section also says that the services rendered from India which have been used outside India should also be taken note of [213 ITR (statute) 51]. The assessee acts as consultant/adviser to foreign buyers of Indian Marine Products. Earlier the foreign enterprises used to buy marine products in their country itself or from neighbouring countries. It was because of the tremendous efforts made by the assessee that the foreign enterprises turned to India. The assessee gets the fee or commission for rendering such services. The whole amount is paid in foreign exchange and brought to India. The assessee’s representative has emphasised that when the assessee earns 1% fees or commission, the actual exports effected through the assessee are 100%. The assessee’s representative relied on the following chart:
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Assessment year Commission earned (.7%) Approx. exports effected ---------------------------------------------------------------------------- 1991-92 18.50 lakhs 20 crores 1992-93 26.73 lakhs 35 crores 1993-94 44.79 lakhs 50 crores 1994-95 47.09 lakhs 60 crores 1995-96 79.14 lakhs 90 crores 1996-97 83.12 lakhs 100 crores ---------------------------------------------------------------------------- The assessee's representative summarised the services rendered by the assessee to the foreign enterprises as follows : (1) To impart commercial and technical knowledge, experience and skill in the 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 its expert opinion and advice to enable them to take decisions for import from India. (3) To keep close liaison with agencies such as EIA/LLOYDS/SGS especially for orgenoleptic/bacteriological analysis and communicate the results of inspection along with its expert comments and advice. This also enables the foreign enterprises to take decisions for import from various sources from several countries available to them. (4) Making available full and detailed analysis of the seafood situation and prices for the above purposes. (5) To advise and keep informed the foreign buyers of the latest trends/process applications in manufacturing and all valuable commercial and economic information which will directly and indirectly assist them to organize, develop, control or regulate their import business from India. (6) To assist foreign buyers in negotiating and finalising prices for Indian Marine products and advise them of all rules and regulations and other related information for such import.
The assessee’s representative has submitted that the services essentially consist of imparting and conveying technical and commercial information and benefit of knowledge, experience and skill which enable the foreign buyers to take decisions as to when and how much they should import from India. Therefore, these are services rendered from India. The assessee’s representative has submitted that the word ‘from’ itself suggests that the services are to be carried out in India and such services are to be utilised outside India. Exactly the same has happened in the instant case of the assessee. The assessee makes available to the foreign party the results obtained through laboratory tests and also through market studies and based on such results the foreign party decides whether to import or not from India. These are services rendered from India and not services rendered in India, according to the learned representative of the assessee. The Assessing Officer merely relied on the opinion expressed by the Addl. Commissioner of Income-tax and had not applied his mind while passing his order. The very use of the word ‘commission’ in Section 80-O clearly suggests that even the agents will be covered by Section 80-O. The real issue is the nature of services rendered and not the capacity in which they are rendered. The assessee’s representative relied on the decision of the Tribunal (Delhi Bench-C) in the case of Capt. K.C. Saigal (supra) and the decision in CIT v. Parrys (Eastern) (P) Ltd. [1989] 176 ITR 449′ (Bom.) for the above proposition. ,
6. Opposing the above submissions, the learned departmental representative has submitted that the assessee’s commission is calculated on C&F value, and therefore, the assessee is not entitled to the benefit of Section 80-O. The assessee’s representative has stated in reply that the mode and manner of payment does not determine its character and even royalty and technical fees are paid as a percentage of turnover, but that does not disentitle them for the benefits allowable under Chapter VI-A. The assessee’s representative also objected to the contention of the departmental representative that the representatives of the foreign buyers often visited India and hence the services rendered by the assessee could be taken to be rendered in India. He has stated that even though the foreign buyer receives and makes use of experience, information and benefit of expertise from an Indian resident, it is unreasonable to expect that his representatives should not visit India at all. It is also incorrect to say that only the services incapable of being rendered in India can be treated as services rendered from India, the assessee’s representative submitted. The decisions in Eastman Consultants (P.) Ltd. ‘s case (supra) and Searle (India) Ltd. ‘s case (supra) on which the department has relied can no longer be pressed into service as they were rendered before the substitution of the explanation to Section 80-O, the assessee’s representative has submitted. Relying on the decision in the case of E.P. W. Da Costa (supra), the learned representative has submitted that it is an excellent illustration of how Section 80-O can be reasonably construed. The learned representative of the assessee concluded his submissions as follows :
In that case the Delhi High Court held that the word ‘use’ in Section 80-O is a very general word. It is not necessary that the use to which the information is to be put must be practical, that is to say it must result in manufacturing or making of some concrete thing. It held that the foreign enterprise (in that case BBC a broadcasting Corporation) can be said to use the information when it formulates or modifies its broadcasting programmes to India according to the guidance given to BBC by the said information. Secondly the High Court held that the word ‘science’ is also a very general word. Statistical tables complied (in India) after analysing masses of numerical data (again gathered in India) can be said to be commercial or scientific knowledge. In our case the foreign buyer also formulates or modifies his import policy based on analysis provided by the appellant. It is submitted that the ratio of the above decision squarely applies to the issue under consideration.
The assessee’s representative also relied on the following decisions :
(a) Dy. CIT v. Mittal Corporation [2001] 77 ITD 270 (Delhi)
(b) AS. Mani v. CIT[1997] 94 Taxman 212 (AAR-New Delhi).
The assessee’s representative has submitted that what the assessee gives is a highly technical advice. Because of the efforts of the assessee, exports in marine products increased. In reply to the above, the learned departmental representative has submitted that the issue is whether the services or advices given by the assessee were anything specialised and whether such advice can be given in India. The assessee is acting only as Agent for and on behalf of the foreign buyer. The assessee itself is purchasing the goods after getting the necessary information. They are not passed on to foreign parties. The learned departmental representative has also submitted that the agreement entered into between the parties will clearly show that M/s. Ramnath & Co., the assessee, was only helping the foreign party to purchase the marine products of India and for that purpose they were conducting studies and on the basis of the same, they were purchasing the goods and exporting. Hence, the learned departmental representative has submitted that the order of the first appellate authority may be set aside.
7. We have considered the rival submissions and gone through the orders of the revenue authorities as well as the decisions relied on by both sides. In order to come to a correct conclusion, it is necessary to ponder over the circumstances leading to the introduction of Chapter VI-A. Chapter VI-A was introduced for rationalisation and simplification of the Act as recommended by Boothalingam Committee. This Committee recommended abolition of the system of rebates and concessions and instead recommended the method of granting deduction equal to certain portion of the expenditure in question or equal to a certain proportion of the income in question, and the proportion is to be determined on ad hoc basis for the category of income or expenditure. Chapter VI-A was thus introduced by Finance Act, 1965 for the first time. Section 80-O was first introduced by Finance Act, 1967 with effect from 1 -4-1968. The purpose for the insertion of this section was elaborated by the Board in Circular No. 5P dated 9-10-1967 as under :
Royalty, Commission, fees, etc. received by an Indian company from a foreign company in consideration of supply to the foreign company of technical ‘know-how’ or technical service.-84. Under Section 85C, Indian companies are entitled to a partial rebate of tax on such income in the same manner as provided in Section 85A in respect of inter-corporate dividends. After the grant of such rebate of tax, the incidence of tax on such income, in the generality of cases, is 25 per cent thereof.
The provision mentioned above is to be replaced with effect from 1-4-1968, by the provision in Section 80-0 contained in the new Chapter VI-A. Under the new provision, Indian companies will be entitled to a deduction, in the computation of their total income, of 60 per cent of the amount of the income referred to above.
8. Section 80-O was amended from time-to-time, and from assessment year 1992-93 it was amended with a view to provide that the concession will also be made available in relation to professional services rendered or agreed to be rendered to the government of a foreign State or a foreign enterprise, by the assessee. Sections 80MM, SON and 80-O grant relief in respect of income derived by the assessee by supplying know-how to foreign governments or foreign companies. Section 80-O also requires that the payment must be received in foreign exchange or in convertible foreign exchange that should be brought to India. The technical know-how is to be used outside India. The mere supply of data or the like to foreign parties is not sufficient to claim the benefit under Section 80-O. This benefit can be claimed by the assessee even if the services are rendered from India.
9. The case of the Revenue is that the assessee has rendered services only in India and not from India. The services that entitle the assessee for the 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 the revenue, the assessee was rendering only a generalised service such as market studies, study of processing, etc. so as to satisfy the quality of the materials exported, like any other general agent. Therefore, the assessee is not entitled to claim the benefit under Section 80-O. Considering the facts and circumstances of the case, we are unable to agree with the above proposition. In CBDT v. Oberoi Hotels (India) (P) Ltd. [1998] 231 ITR 148′ the Supreme Court has held that the agreement for managing modern hotel, including promotion of business, recruiting and training staff are all such services that entitle the assessee for the benefit of Section 80-O. In the case of Kamkap (India) v. Dy. CIT [1998] 67 ITD 237 the Patna Bench of the Tribunal has held that negotiating commercial or technical terms of purchase and following up of orders as accredited agents of foreign principals and arranging shipment of goods need specialised knowledge of working and hence could be regarded as technical or professional services rendered to foreign enterprises as provided in Section 80-O. The Tribunal in this case decided the issue against the assessee on the ground that the assessee failed to furnish any evidence that the foreign principals purchased materials from India on the basis of information and details supplied by the assessee. In Circular No. 700 issued on 23-3-1995 the Board clarifies the position. It clarifies that “as long as the technical and professional services are rendered from India and are received by a foreign Government or enterprise outside India, deduction under Section 80-O would be available to the person rendering the services even if the foreign recipient of the services utilises the benefit of such services in India”. Now, the question is whether the assessee rendered any service and communicated the same to the foreign party. Article 2(4) of the agency agreement regarding marine products entered into between Gelazur S.A. and Ramnath & Co. (assessee) states that the assessee is to inform “GELAZUR” regularly about the 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 the assessee has to communicate the data it collected, and on the basis of this, the foreign party acts either to purchase or not to purchase. It is also true that Article 4 of the said agreement states that “if, any claim arises out of or in relation to the purchase of products for which ‘GELAZUR’ has no responsibility, ‘RAMNATH’ will do their best to settle the claim through negotiation with manufacturers”. This indicates that the party is also doing supply of service. But, this part of the service is only consequential to the first. The agreement entered into between Hoko Fishing Co. Ltd., Tokyo, Japan and the assessee also stipulates that the assessee has to keep “Hoko” informed of the latest trends/processes applications in manufacturing and of all valuable commercial and economic information about the markets, 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, the assessee has to render services to ensure highest standards of quality, hygiene and freshness of products including supervision at various stages. The second mentioned services may be considered as services rendered in India. But, definitely the other services rendered and informed to the other party like latest trends/processes applications in manufacturing, commercial and economic information about the markets, Government Policies, exchange fluctuations, banking laws etc. which help the foreign party to import marine products from India is a specialised and technical service. That, in our view, qualifies the assessee to claim deduction under Section 80-O.
10. It is true that the difference between ‘the services rendered from India’ and ‘the services rendered in India’ used in the Explanation below the proviso to the section is wafer-thin. But still the difference exists when looked from the point of view of the Indian Exporter. The services rendered in India are services to make the goods eligible for export. On the other hand, the services rendered from India can be treated as services rendered, as desired by the foreign party, which need specialisation. If the foreign party is interested in details or information or specific details and such details are supplied by the 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 the foreign party seeks any service and it is rendered, it is a service rendered from India, whereas the services rendered in India are not necessarily by virtue of the other party’s request or demand. In Godrej & Boyce Mfg. Co. Ltd. v. S.B. Potnis, Chief Commissioner [1993] 203 ITR 947′ the Hon’ble Bombay High Court held that a provision made for the giving of all marketing, industrial, manufacturing, commercial and scientific knowledge, experience and skill for the efficient working and management of the foreign company could be treated as services rendered that make the assessee eligible for the benefit under Section 80-O.
11. In Mittal Corporation’s case (supra), the Delhi Bench-D of the Tribunal held that the object and spirit of Section 80-O was to mainly encourage Indian technical know-how and skill abroad and since the information was given outside India party and it was used outside India and payment was received in convertible foreign exchange, the conditian required for allowing deduction under Section 80-O could said to have been fulfilled. In the case of E.P. W. Da Costa (supra) the Delhi High Court has held that if the information passed on by the assessee is of practical nature and was a result of making or manufacturing some concrete thing and such information has been utilised by the foreign party, such information is sufficient to claim the benefit under Section 80-O.
12. Before parting with, let us think in a negative way. If the assessee had not passed on the information like marketing, processing, quality control, etc. to the other party, the export would not have materialised. Short of this information, if the assessee had done services like packing, shipping, etc. and ensured quality and quantity, the assessee is merely an exporter and cannot claim the benefit contemplated under Section 80-O. If we look from this angle also, we are of the opinion that the assessee is entitled to succeed.
13. In the result, the appeal by revenue is dismissed.