Objective of Sec. 80-O is mainly supply of technical know-how or technical services to developing countries

One thing is clear that the DR has not challenged the allowability of deduction u/s. 80-O, he has shown serious reservations on the basis of allowability, i.e. whether the deduction should be allowed on net amount or on gross amount.

The DR pointed out the decisions of Hon’ble Bombay High Court in the case of CIT Vs Asian Cable Corpn. Ltd. I.T. Reference No. 530 of 1987, reported in 129 Taxman 590. The DR has also referred to the decision of Hon’ble Karnataka High Court in the case of ACIT Vs Abcon Engg. & Systems (P) Ltd. Reported in 164 Taxman 600 on the issue of allowability on export proceeds. Besides this, the AR also placed reliance on the decision of ITAT Bangalore in the case of ITO Vs Vivek Prabakar Kunte, ITA No. 79/Bangalore/2001, reported in 92 ITD 71, wherein it was held that the objective of Sec. 80-O is mainly the supply of technical know-how or technical services to developing countries.

We find that the issue of disallowance in the current appeal is virtually infructuous, following the decision of the assessee’s own case in the preceding years and even after going through the provisions of the Act in preamendment period and post amendment (relevant to the assessee), wherein we find the word “design” still exist. We cannot accept the submission of the DR that the assessee was primarily supplying man power and not comprehensive technical services. We find and hold that the assessee was supplying comprehensive technical services for designing and development of Salima Refinery, which would also include “to depute a competent team of professionals ………” as one of the services besides other services as mentioned in the terms of Reference and Deliverables of the assignment. We, therefore, hold that the assessee is eligible for claiming deduction u/s. 80-O. This ground, therefore, filed by the revenue is rejected.

INCOME TAX APPELLATE TRIBUNAL, MUMBAI

ITA No.6791/Mum/2002 – A.Y-1999-2000

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