Law:

Section:

Section 80-o of Income-tax Act, 1961 - Deductions - Royality etc. from certain foreign enterprises Where assessee shipping agent provided commercial information to foreign ship-owners and received commission from foreign buyers in convertible foreign exchange it was entitled to deduction under section 80-O as assessee had rendered commercial service to foreign ship-owners and for use of such information outside India by foreign ship-owner, received commission in convertible foreign exchange [Assessment years 1994-95 to 1997-98] [In favour of assessee] CIT v. Chakiat Agencies (P.) Ltd. [2009] 314 ITR 200 /224 CTR (Mad.) 286 The assessee was a shipping agent and its activities were that on the basis of information received from the parties, intending to send cargo, they used to contact the foreign shipowners, which would meet the needs of carrying of cargo. The assessee had to ensure that the shipowners should pick up the cargoes and transport it within the time and at the agreed rates. The information regarding availability of cargo to shipowners and their destinations at frequent intervals enabled the shipowners to program the ships travel touching the Indian coasts accordingly. The assessee used to contact the shipowners whenever they sent the cargo and in that process they exchanged various types of special information with the shipowners or concerned parties. The assessee also used to contact the shipowners and other parties on various issues before conclusion of agreements between them. For such services, the assessee received commission. After meeting the freight charges and other incidental expenses such as insurance and after deduction of the commission, the balance amount was sent to the shipowners in foreign exchange. The assessee's claim was that it was entitled to deduction under section 80-O as the services rendered by it could very well be regarded as information concerning commercial knowledge. Held that the assessee had rendered commercial service to the foreign shipowners and for the use of such information outside India by the foreign shipowner received commission in convertible foreign exchange. Hence the rendering of the commercial service…

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