NDLI: Ramnath & Co. Vs. The Commissioner of Income Tax

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Income Tax Act 1961 s. 80-O
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Act(s) Referred	Income Tax Act, 1961 (43 of 1961)
Case(s) Referred	Referred Case 0 Referred Case 1
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Dismissed
Headnote	Income Tax Act, 1961 – s. 80-O – The appellants-assessees were engaged in providing services to certain foreign buyers of frozen seafood and/ or marine products – Appellants claimed that income received by them for services provided to foreign enterprises qualifies for deduction u/s. 80-O of the Income Tax Act, as applicable during the respective assessment years from 1993-94 to 1997-98 – Appellants contended that they provided technical guidance or advice or information to the foreign enterprises – Held: All the clauses of the agreements read together make it absolutely clear that the appellant was merely a procuring agent and it was his responsibility to ensure that proper goods are supplied in proper packing to the satisfaction of the principal – Significantly, the payment to the appellant, whatever label it might have carried, was only on the basis of the amount of invoice pertaining to the goods – There had not been any provision for any specific payment referable to the so-called analysis or technical guidance or advice – Services provided by the appellant as agent were rendered in India – Even if certain information was sent by the assessee to the principals, the information did not fall in the category of such professional services or information which could justify its claim for deduction u/s. 80-O of the Act – Further, default clauses in the agreement made it more clear that if quality of goods was found to be unsatisfactory to principals, then they shall have no responsibility to pay agent’s fees – If at all it had been a matter of the appellant furnishing some technical information, the appellant was likely to receive some professional charges, however, agreement provided for no payment in case of dissatisfaction with goods – Besides, the appellants failed to establish as to what was such information of special nature or of expertise that was given by it and how the same was utilised, if at all, by the foreign enterprises and how much of the foreign exchange receipt was attributable to such special service – Hence, the services rendered by appellants do not qualify for the purposes of s. 80-O of the Act. Interpretation of Statutes – Tax incentive provisions – Held: The principles laid down in Constitution Bench in Dilip Kumar & Co., when applied to incentive provisions like those for deduction, would be that the burden lies on the assessee to prove its applicability to his case; and if there be any ambiguity in the deduction clause, the same is subject to strict interpretation with the result that the benefit of such ambiguity cannot be claimed by the assessee; rather it would be interpreted in favour of the revenue.
Judge	Hon'ble Mr. Justice Dinesh Maheshwari
Neutral Citation	2020 INSC 415
Petitioner	Ramnath & Co.
Respondent	The Commissioner Of Income Tax
SCR	[2020] 6 S.C.R. 719
Judgement Date	2020-06-05
Case Number	2506-2509

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