Law:

Section:

Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure undertakings - Where assessee-company, engaged in business of tours and travels arrangement for foreign tourists visiting India had entered into arrangement with various shops to sell merchandise to foreign tourists and in turn received commission from them for sending foreign tourists to their shops to buy goods, commission so received by it was not eligible for deduction under section 80HHD [In favour of revenue] It is clear that the expression "derived from" as occurring in section 80HHD has been interpreted to mean that such an income should be the result of services provided to foreign tourists. To put it otherwise, the source of income should be generated directly from the foreign tourists. Where the assessee-company engaged in the business of tours and travels arrangement for foreign tourists visiting India had entered into arrangement with various shops to sell merchandise to foreign tourists and in turn received commission from them for sending foreign tourists to their shops to buy goods and claimed deduction under section 80HHD in respect of such commission received from the shop. Held that admittedly, the assessee was receiving the commission from shopkeepers and not in foreign exchange from the tourists directly. The assessee earned from the shop keepers in India who in turn may be earning from the foreign tourists in selling their merchandise. As far as the assessee was concerned, he was receiving the shopping commission in Indian currency, that too from Indian businessmen, namely, the shopkeepers. The pre-condition stipulated in section 80HHD was, therefore, not satisfied. Hence, the assessee's claim could not be allowed. CASES REFERRED TO CIT v. Sterling Foods [1999] 237 ITR 579 (SC), Hindustan Lever Ltd. v. CIT [1999] 239 ITR 297(SC), Liberty India v. CIT [2009] 317 ITR 218 (SC) and Lotus Trans Travels P. Ltd. v. CIT[2011] 332 ITR 463 (Delhi). Sanjeev Sabharwal for the Appellant. Ajay Vohra, Ms. Kavita Jha and Somnath Shuklafor the Respondent. JUDGMENT A.K. Sikri, J. - The assessee-company is engaged in the business of tours and travels arrangement…

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