Case: RAMNATH AND CO Vs. THE COMMISSIONER OF INCOME TAX

3. Put in a nutshell, the question involved in these appeals has arisen in the backdrop of facts that the appellants herein, who had been engaged in providing services to certain foreign buyers of frozen seafood and/or marine products and had received service charges from such foreign buyers/enterprises in foreign exchange, claimed deduction under Section 80-O of the Act of 1961, as applicable for the relevant assessment year/s. In both these cases, the respective Assessing Officer/s denied such claim for deduction essentially with the finding that the services rendered by respective assessees were the services rendered in India and not the services rendered from India and, therefore, the service charges received by the assessees from the foreign enterprises did not qualify for deduction in view of clause (iii) of the Explanation to Section 80-O of the Act of 1961. After different orders from the respective Appellate Authorities, the Income Tax Appellate Tribunal , Cochin Bench accepted the claim for such deduction under Section 80-O of the Act with the finding in case of the assessee Ramnath & Co. (Related with the appeal arising out of SLP (Civil) Nos. 23535-23538 of 2016.) for the assessment year 1993-94 that as per the agreements with the referred foreign enterprises, the assessee had passed on the necessary information which were utilised by the foreign enterprises concerned to make a decision either to purchase or not to purchase; and hence, it were a service rendered from India. The same decision was followed by ITAT in the case of this assessee for other assessment years under consideration as also in the case of other assessee M/s LaxmiAgencies (Related with the appeal arising out of SLP(Civil) No. 23699 of 2016) . The revenue preferred appeals before the High Court against the orders so passed by ITAT in favour of the present appellants as also a few other assessees. These appeals have been considered together by the High Court of Kerala; and similar questions regarding eligibility for deduction under Section 80-O of the Act in relation to the similarly circumstanced assessees have been decided by the impugned common judgment dated 09.06.2016. The High Court has essentially held that the assessees were merely marine product procuring agents for the foreign enterprises, without any claim for expertise capable of being used abroad rather than in India and hence, the services rendered by them do not qualify as the services rendered from India, for the purpose of Section 80-O of the Act of 1961. Therefore, the High Court has allowed the appeals of revenue while setting aside the respective orders of ITAT. Aggrieved, the assessees have preferred these appeals .4. The basic factual and background aspects relating to the two assessees in appeal before us are more or less similar in nature but, having regard to the position that ITAT had decided all other appeals based on its order dated 19.11.2001 for the assessment year 1993-94 in relation to the assessee-appellant Ramnath & Co. and the High Court has also rendered common judgment essentially with reference to the facts relating to this assessee (with other assessees having adopted the same contentions), it appears appropriate to elucidate the same facts and background aspects for dealing with the questions raised in these appeals.RELEVANT FACTUAL AND BACKGROUND ASPECTS:5. The appellant Ramnath & Co. is a firm engaged in the business of providing services to foreign buyers of Indian marine products. The appellant filed its return of income for the assessment year 1993-1994 on 29.10.1993 declaring total taxable income at Rs. 6,21,710/- while claiming 50% deduction (amounting to Rs. 22,39,825/-) under Section 80-O of the Act in relation to the amount of Rs. 44,79,649/- received by it as service charges from foreign enterprises .5.1. While asserting its claim for such deduction under Section 80-O of the Act, the appellant submitted that it had rendered myriad services to the foreign enterprises like: (i) locating reliable source of quality and assured supply of frozen seafood for the purpose of import and communicating its expert opinion and advice in that regard; (ii) keeping a close liaison with agencies concerned for bacteriological analysis and communicating the result of inspection together with expert comments and advice; (iii) making available full and detailed analysis of seafood supply situation and prices; (iv) advising and informing about the latest trends in manufacturing and markets; and (v) negotiating and finalising the prices for Indian exporters of frozen marines products and communicating such other related information to the foreign enterprises. The appellant claimed that pursuant to the terms and conditions of the agreements with the foreign enterprises, it had received the said service charges; and its services had directly and indirectly assisted the foreign enterprises to organise, develop, regulate and improve their business.5.2. In regard to such claim for deduction under Section 80-O of the Act, the AO, by his letter dated 29.01.1996, raised the following queries and sought clarifications from the appellant:-1.The location of services rendered by the assessee may be mentioned if there are any services rendered outside India2. Whether the technical/professional services rendered by the assessee were utilized by the foreign enterprises anywhere in India or outside India independently of the assessee3. Whether the technical/professional services rendered by the assessee were utilized by the foreign enterprises, in India, independently and without the assessee. In response, the appellant justified its claim for deduction under Section 80-O of the Act by way of its letter dated 19.02.1996 while asserting as under: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, U.S.A., U.K. and France. None of these foreign enterprises have utilized our services in any part of India. But the entire benefit of our services were utilized by them in effectively distributing and marketing the Indian sea-foods in their respective countries.3. We would like to emphasize that the foreign enterprises have no place of business in India nor do they market any goods or services in India.4. Without services the import of marine products from India by the foreign enterprises will not be possible.5.4. In his assessment order dated 28.03.1996, the Assessing Officer proceeded to analyse the agreements of the appellant with the two foreign enterprises and reproduced the relevant terms thereof in extenso. This part of the order of the AO, containing material terms of agreements, being relevant for the present purpose, is reproduced as under: -In the context of the above claim of the assessee, it is necessary to go through the agreements entered into by the assessee with the foreign enterprises to find out the nature of the relationship of the assessee with the foreign enterprises. I have gone through the agreements entered into by the assessee with HOKO Fishingco Ltd. is captioned agreement regarding marine products and that with GELAZURE S.A. is captioned agency agreement regarding marine products. Articles 1 to 4 of the agreement with HOKO fishing Co. Ltd. reads as under:-Article 1:HOKO desires to avail of the benefit of the commercial and technical knowledge experience and skill of RC-CN foods/Marine products of good quality and on favourable terms and is willing to remunerate RC-CN for use of such commercial and technical knowledge, expert and skill and other related services.Article 2: RC-CN agrees to render to HOKO the following services on a continuing basis.a) Locating reliable sources of quality and assured supply of frozen seafood/marine products for the purpose of import by HOK and communicate its expert opinion and advice to HOKO.b) In addition to the above services rendered by RC-CN, it will also keep a close liaison with agencies such as EIA/LLOYDS/SGS especially for organoleptic/bacteriological analysis and communicate the results of inspection along with its expert comment and advise.c) Making available full and detailed analysis of the sea food supply situation and prices.d) To advise HOKO and keep them informed of the latest trends/processes application 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 organize, develop control or regulate their import business from India.e) To negotiate and finalize prices for Indian Exporters of frozen marine products and to communicate such and other related information to HOKO.Article 5 RC-CN shall also do everything that is required to ensure highest standards of quality hygiene and freshness of products including supervision at various stages.Article 4: HOKO pays to RC-CN 0.7% of the invoice amount on the C & F basis and US$ 2,000.00 per month as commission. When the quality of goods is found to be unsatisfactory to HOKO after inspection in Japan, HOKO shall have no responsibility to pay the agent fee.Similarly, articles 1 to 4 of the Agreement with GELAZUR S.A read as under:-Article 1:GELAZUR appoints RAMNATH as agent to operate in priority their purchases in frozen seafoods products in India.Article 2 : RAMNATH does the following business as Agent on behalf of GELAZUR.1)To negotiate with the local packers for the purchase of the frozen seafood products which GELAZUR requires:2)To give GELAZUR all the accurate information in respect of the standard, quantity, price, quality, time of shipment, etc. promptly, whenever the purchase of the products is made3)To carry out technical guidance for processing and for quality control and inspection of the products and to advise GELAZURE of the results.4)To inform GELAZURE 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.Article 3: After reception of the goods, GELAZURE will pay RAMNATH commissions calculated on the following basis:Cephalepods or Fishes : 1.5% of the C+F Value Shripps-Lobsters: 0.75% of the C+F Value OTHER PACKERSSHRIMPS & LOBSERS : 1% OF THE C+F value Squids, cuttlefish, CockiesMussels and other Fishes: USD O.65/KgWhen the quality and the packaging of the goods are found to be unsatisfactory to GELAZUR after inspection in FRANCE, GELAZURE, shall have no responsibility regarding the payment of the Agents fee.Article 4: If any claim arises out of or in relation to the purchases of products for which GELAZUR has no responsibility, RAMNATH will do their best to settle the claim through negotiation with manufacturers. The settlement of the claim will have to be carried out 60 days after the reception of the goods.5.5. Having examined the contents of two agreements, the Assessing Officer did not feel convinced with the claim that the appellant had been rendering services from India so as to qualify for deduction under Explanation (iii) to Section 80-O of the Act. The Assessing Officer was firmly of the view that the appellant had worked only as an agent of the foreign enterprises in the matter of procurement of marine products from India; and all the services envisaged in the agreements were incidental to the carrying out of main function as agent. The Assessing Officer recorded his observations and findings as follows: -….A close study of the articles extracted above, would establish that the assessee is merely an agent of the foreign enterprises in India in the matter of procurement of marine products from India. All the services which are required to be carried out by the assessee in terms of the agreements are incidental to the carrying out of the primary function of acting as an agent. The assessees role is to act on behalf of the foreign principals within the limits allowed by them. In terms of the agreements, the assessee negotiates with local packers with regard to quality, quantity and price. On behalf of the principals, the assessee carries out technical guidance for processing and for quality control and also inspection of the products and also keeps close liaison with various agencies. These are definitely services rendered in India and cannot be construed as services rendered from India merely relying on the facts that the foreign principals are advised of the results and that they are stationed outside India. It is true that as per agreement, the assessee was to supply certain information of a general nature regarding markets, government policies, exchange fluctuations, banking laws, prices paid by competitors, monthly supplies of seafood data etc. However, the agreements do not envisage any payment of separate in commission or service charge for such information. The commission is payable to the assessee as a percentage of the C & F value of the imports by the foreign enterprises through the assessee. However, the payment of commission is conditional on the foreign enterprises finding the quality of goods satisfactory. This would reinforce my earlier observation 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 agreement are incidental to the carrying out of the main function as agent. It is also not as if the foreign enterprises completely stayed away from India. Though it might be a fact that none of the foreign enterprises had any office or branch anywhere in India, available information indicates that the representatives of the foreign enterprises used to visit India in connection with the procurement of marine products from various packers in India and it fell upon the assessee to take these persons to the processing facilities of various suppliers with a view to ensure quality and hygiene standards. This is evident from the fact that a sum of Rs.23,122/- has been incurred by the assessee during the visit of buyers, representatives to various seafood packers in Calcutta, Bombay vizag, Madras Nandapam, Cochin, Calicut etc. Expenses for souvenirs, compliments and samples of the value of Rs.29,411.99 have also been incurred presumably in connection with the visit of the representatives of the foreign buyers. By any stretch 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. The foreign travels undertaken by the Managing Partner for meeting various buyers can been seen as only an extension of the assessees role as an agent of the foreign enterprises in India. An agent of a foreign enterprise in India necessarily acts on behalf of the foreign enterprise in India, and therefore, the services, namely carrying out inspections to ensure quality of the products and packaging, supervision of processing, negotiating prices in respect of marine products exported with the assistance of the assessee, could not have been rendered outside India as the parties to be contacted, products to be inspected, processing to the supervised etc. were situated in India only. In my view services that are incapable of being rendered outside India will not come under the category of services that can be rendered from India. Therefore, there is no merit in the contention of the assessee that these services were rendered from India but not within India….(emphasis in bold supplied)5.6. The appellant also relied upon Circular No. 700 dated 23.03.1995 issued by the Central Board of Direct Taxes (CBDT for short) in support of its contentions. The Assessing Officer distinguished the matter dealt with by the said Circular from that involved in the present case in the following passage: -…..The assessee also strongly relies on circular No.700 dated 23/3/95 issued by the C.B.D.T. In my view, the reliance on the above circular by the assessee to buttress its case is misplaced. Para 3 & 4 of the above circular which are quits relevant, reads as under : -3. A question has been raised as to whether the benefit of Section 80-O would be available if the technical and professional services, though rendered outside India, are used by the foreign government or enterprise in India.4. The matter has been considered by the Board. It is clarified 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 utilizes the benefit of such services in India.As is clear from the above, the C.B.D.T. was dealing with a question whether deduction under Section 80-O could be denied on the ground that the foreign enterprise uses the services rendered outside India, in India. It has been clarified that merely because the foreign enterprises utilized the benefit of services rendered outside India, the deduction under Section 80-O cannot be denied. In the case before the C.B.D.T, there was not dispute as to where the technical services were rendered, In the case before me, there is absolutely no scope for doubt that the services as an agent were rendered by the assessee in India only. In 132 ITR 637 , the Bombay High Court held that an assessee acting as a mere employment recruiting bureau was not entitled for deduction under Section 80-O and the services rendered in locating prospective candidates and collecting their bio-datas and conveying names of candidates to foreign employers did not represent services rendered outside India. Similarly, in 145 ITR 673 in the case of Searls (India) Ltd, the same High Court ruled that testing of samples in India and giving results and certificate to foreign company did represent technical services rendered outside India. In view of the forgoing discussion, I would hold that the assessee is not entitled for deduction u/s 80-O as the services made available to the foreign enterprises were rendered in India.5.7. In the aforesaid view of the matter, the AO disallowed the claim for deduction under Section 80-O of the Act.5.8. In the appeal taken by the appellant, the Appellate Authority did not agree with the opinion of the Assessing Officer, particularly with reference to the decision of Delhi High Court in the case E.P.W. Da Costa and Ors. v. Union of India: (1980) 121 ITR 751 (Delhi) and a decision of ITAT Delhi, D Bench in the case of Capt. K. C. Saigal v. Income Tax Officer: (1995) 54 ITD 488 (Delhi) and hence, allowed the appeal while observing, inter alia, as under: -14……In the present case, there is no dispute that the appellant is supplying information with regard to the markets, government policies, exchange fluctuations, banking laws, data with regard to monthly supply of sea-food etc. to the foreign enterprises. Secondly, even if the appellant is a mere agent of the foreign enterprises, he is bringing the foreign enterprises in contact with the manufacturers or processors of shrimps, lobsters etc. and negotiating with the local packers and is locating sources of frozen sea- foods for the foreign enterprises. Though the various items of activity are rendered in India, they are done on behalf of the foreign enterprises and the market and other information had been supplied from India to the foreign enterprises.15. In section 80-O, Explanation (iii) reads as under : -Services rendered or agreed to be rendered outside India shall include services rendered from India but shall not include services rendered in India.The word from means out of or springing out of. Thus, from India necessarily means that some of the activities will spring out of or will be in India because the services are rendered from India. In this connection, I am of the view that the decision of the Delhi High Court in E.P.W. De Costa & Another vs. Union of India (121 ITR 751) is really applicable to the facts of the case. The services rendered with regard to assessing the radio-listening habits of the people were rendered in India i.e. The data had been collected in India. However, it was held that a mere mass of information without analysis and without being understandable would not be of use to the B.B.C. The information is not, therefore, mere data but scientific knowledge. In the present case, the appellant has located reliable source of quality and assured supply of frozen sea-food products to the various foreign enterprises at Japan, France and other countries and supplied information with regard to sea-food processing, manufacturing details and also government policies, exchange fluctuations etc. to the foreign enterprises. The appellant has negotiated and finalised prices for the Indian exporters of frozen sea-food products and communicated the same to the foreign enterprises. Thus, the appellant has rendered the services from India to these foreign enterprises. That the appellants information and experience have been effectively utilised by the foreign enterprises can be seen from the fact that the export effected by the appellant- concern have risen from 20 crores in the AY 1991-92 to 100 crores by AY 1996-97. For the year under consideration, the exports are approximately 60 crores on which the appellant has earned a commission of Rs. 44.79 lakhs.16. The major issue to be decided in this case is whether the services rendered by the appellant can be said to be from India. On the facts and circumstances of the case, I am of the opinion that the services have been rendered from India and hence, the appellant is eligible for deduction u/s 80-O, especially in view of the decision of the Delhi High Court in E.P.W. De Costa & Another vs. Union of India (121 ITR 751) and the I.T.A.T. Delhi D Bench decision in the case of Capt. K. C. Saigal vs. I.T.O. (54 ITD 488).(emphasis in bold supplied)5.9. Aggrieved by the decision aforesaid, the revenue preferred appeal before the ITAT, being ITA No. 84/Coch/1997, that was considered and decided by ITAT by its order dated 19.11.2001. The ITAT took note of the history of introduction of Chapter VI-A and Section 80-O to the Act of 1961 by the Finance (No. 2) Act, 1967 as also the fact that Section 80-O had undergone several amendments over the course of time. The ITAT concurred with the findings of the Appellate Authority that the services rendered by the appellant, which helped the foreign parties to import marine products from India, had been specialised and technical services and thereby, the appellant was entitled to claim deduction under Section 80-O of the Act. The ITAT observed and held, inter alia, as follows: -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 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 services. 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 market, 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.(emphasis in bold supplied)5.10. The ITAT also referred to the subtle distinction in the two phrases: the services rendered from India and the services rendered in India; and while referring to a decision of Bombay High Court in the case of Godrej & Boyce Mfg. Co. Ltd. v. S.B. Potnis, Chief Commissioner: (1993) 203 ITR 947 (Bom) as also other decisions, observed that if the assessee had not passed on the requisite information, the export would not have materialised. According to ITAT, if the assessee had done the services like packing, shipping etc., in that case, the assessee would have been merely an exporter and could not have claimed the benefit under Section 80-O but, the services rendered by the assessee were of specialised nature, which had been utilised by the foreign party. Accordingly, the ITAT dismissed the appeal of revenue while observing as under:-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 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 partys request or demand. In Godrej & Boyce Mfg. Co. Ltd. vs. S.B. Potnis, Chief Commissioner [1993] 203 ITR 947  the Honble 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 Corporations 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 condition 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.(emphasis in bold supplied)6. The facts discernible from the material on record make out that on the similar pattern, the ITAT also allowed the claim of this appellant in relation to the assessment years 1994-95, 1995-96 and 1996-97, while following its earlier orders. As noticed, the appeals against the orders passed for these assessment years were clubbed together and disposed of by the High Court by way of the common judgment dated 09.06.2016, which is in challenge in these appeals.The impugned judgment by the High Court7. In its impugned common judgment dated 09.06.2016, the High Court of Kerala has disagreed with ITAT and has disallowed the claim for deduction by the appellant essentially with the finding that the appellant was merely a marine product procuring agent for the foreign enterprises, without any claim for expertise capable of being used abroad rather than in India and hence, the alleged services do not qualify as the services rendered from India, for the purpose of Section 80-O of the Act of 1961.8. In view of the submissions made and the subject-matter of these appeals, we may examine the observations and reasoning in the impugned judgment that have led the High Court to disagree with ITAT and to reject the claim of the appellant for deduction under Section 80-O of the Act in requisite specifics.8.1. The main plank of submissions on behalf of revenue, with reference to the agreements between the assessee on one hand and the two foreign companies respectively on the other, had been that the assessee was simply an agent of the foreign enterprises for procuring marine products from India; that all its services were incidental to its main functioning as a fish-procuring agent; and that the assessee rendered its services in India, contra-distinguished with the expression from India. It was also contended on behalf of the revenue that mere communication between the assessee based in India and the principal based abroad does not bring their transactions within the purview of Section 80-O. The submissions on behalf of the revenue were supported with a Division Bench decision of that High Court in Commissioner of Income Tax v. Thomas Kurian (Dead) through LR Smt. Primari C. Thomas, since reported as (2012) 72 DTR (Ker). On the other hand, it was contended on behalf of the assessee that on reading the principal provision of Section 80-O of the Act with clause (iii) of the Explanation, it was clear that once the service is provided by an Indian company (or other person who is resident in India) and the same is used by a foreign entity outside India, it made no difference if the advice is rendered from Indian soil. In relation to the query of the Court as to whether all the services mentioned in the agreement would come within the purview of Section 80-O, the response on behalf of the assessee had been that if the recipient of services is situated outside, all the services rendered by the assessee in terms of the agreement come within the sweep of the provision. It was, therefore, contended on behalf of the assessee that the assessees establishing which of its services qualifies for the deduction is of no consequence, rather unnecessary. The decision in Thomas Kurian (supra) was distinguished on behalf of the assessee with reference to the facts that the assessee therein was engaged only in verification of quality and fitness of marine products but provided no commercial or technical information from India to the foreign buyers whereas the assessee in the present case had been supplying commercial and technical information and, using the information supplied by the assessee, the foreign companies had taken decision outside India as regards how they could purchase the merchandise. The submissions on behalf of the assessee were supported with reliance on the said Circular No. 700 dated 23.03.1995 and the decisions in M/s Continental Construction Ltd. v. Commissioner of Income Tax, Central-I: (1992) 195 ITR 81 (SC); Commissioner of Income Tax v. Mittal Corporation: (2005) 272 ITR 87 (Delhi); Li & Fung India (P) Ltd. v. Commissioner of Income Tax: (2008) 305 ITR 105 (Delhi); Commissioner of Income Tax v. Chakiat Agencies (P) Ltd.: (2009) 314 ITR 200 (Mad); Commissioner of Income Tax v. Inchcape India (P) Ltd: (2005) 273 ITR 92 (Delhi); Central Board of Direct Taxes, New Delhi & Ors. v. Oberoi Hotels (India) Pvt. Ltd.: (1998) 231 ITR 148 (SC) and E.P.W. Da Costa (supra).8.2. Having thus taken note of the rival submissions, the High Court proceeded to analyse Section 80-O of the Act with its Explanation (iii). After reproducing the relevant text of the provisions, the High Court entered into the lexical semantics of the prepositions from and in with reference to their dictionary meanings. Then, reverting to Section 80-O of the Act, the High Court observed that therein, the constants were the Indian agent, the foreign principal, and the Indian agent rendering services from India but the variables were as to how and where the services were used. Thereafter, the High Court looked at the intent and purpose behind Section 80–O of the Act and observed as under: –29. Every nation meets any measure more than half way if it results in the nations augmenting the foreign reserves. India is no exception. It encourages and provides incentives to those who earn foreign exchange. Over and above the incentive is the facility of deduction from the taxable income in foreign exchange. Proceeding further, the High Court examined the position obtainable in regard to the interpretation and application of Section 80-O of the Act from the precedents cited at Bar. The High Court pointed out that in Thomas Kurian (supra), a case dealt with by the same High Court, the main service rendered by the assessee was admittedly of examining the quality and type of fish processed by the exporters in India and certifying the fitness of the product for shipment; and such a service was rendered entirely in India. It was further pointed out that in E.P.W. Da Costa (supra), the assessee had been a consultant engaged in conducting specialised economic and public opinion research on an all-India basis to assess the attitudes of political, social and economic subjects and in the given nature of work, the High Court of Delhi held that BBC, based in London, can be said to have used the information received from the assessee to formulate or modify its broadcasting programmes to India; and though the information was provided by the assessee from India, it was used in another country in its entirety. As regards the decision in Mittal Corporation (supra), the High Court observed that the assessee therein received commission as a buying agent of certain foreign enterprises and it was held that it was not necessary that the assessee must provide technical services even where it received consideration for only providing commercial information. The High Court, however, observed that from the said decision, it could not be gathered as to how the commercial information provided by the assessee was used by the foreign enterprises outside India which was a crucial aspect for determining the application of the provision. As regards the decision in Oberoi Hotels (supra), the High Court again observed that the factual background was not explicit, but since the agreement involved the assessees training the Nigerian personnel, it was held that the assessee undoubtedly under the contract must make use of its commercial and scientific expertise as well as experience and skill, outside India. As regards the case of Inchcape India (supra), it was pointed out that the assessee had to work in textile testing, inspection of soft lines, electrical and electronic products according to the existing standards of European and American markets, etc. It was also pointed out that the issue arose much before the insertion of Explanation (iii) to Section 80-O of the Act. In reference to the decision in Li & Fung (supra), the High Court pointed out that therein, assessee claimed to have rendered technical services out of India as a buying agent and the High Court of Delhi held that the services rendered by the assessee required knowledge, expertise and experience; and, therefore, the fee it received from foreign enterprises for supply of commercial information sent from India for use outside India was eligible for deduction under Section 80-O of the Act. The Court observed that the said decision gave judicial imprimatur to the Boards clarification to the effect that if an assessee renders technical or professional services from India to a foreign Government or enterprise outside India, it can claim deduction even if the foreign recipient utilises the benefit of such services in India. In this line of consideration, the High Court lastly referred to the decision in the case of Chakiath Agencies (supra) and pointed out that therein, the assessee, a shipping agent, was to ensure that the ship owner picks up the cargo and transports it within time and at the agreed rates; and the information regarding the availability of cargo to ship owners and its destinations at frequent intervals enabled the ship owners to program the ships travel touching the Indian coasts. In the given facts, it was held that the assessee had rendered commercial service to the foreign shipping owner for his use outside India and received a commission in convertible foreign exchange, entitling it to the benefit of Section 80-O of the Act. After such discussion in relation to the aforesaid decisions, the High Court observed that two crucial aspects of Section 80-O of the Act had not fallen for consideration therein: as to what type of services rendered by an Indian entity falls within the sweep of the provision and as to what is the true import of the expression use outside India. The High Court said thus:. Having said so in relation to the aforementioned decisions, the High Court took note of the decision of this Court in the case of Continental Construction (supra), wherein the assessee was a civil construction company that had entered into various contracts for the construction, inter alia, of a dam and irrigation projects in Libya and water supply projects in Iraq after obtaining the approval of CBDT in terms of the then applicable requirements of Section 80-O of the Act. The High Court noticed that in that case, on the assessees claim for the benefit under Section 80-O of the Act, this Court has held that the assessee was undoubtedly rendering services to the foreign Government and those were technical services indeed, for they required specialised knowledge, experience and skill. The revenues contention that those services were not covered by Section 80-O of the Act because there was no privity of contract between the employees of the assessee and the foreign Government was rejected by this Court while observing that the assessee was a company and any technical services rendered by it could only be through the medium of its employees. As regards the claim for a deduction based on labelling of the receipts, this Court held that that eligibility of an item to tax or tax deduction could hardly be made to depend on the label given to it by the parties in that, an assessee was not entitled to claim deduction under Section 80-O merely because certain receipts were described in the contract as royalty, fee or commission and at the same time, absence of a specific label cannot destroy the right of an assessee to claim deduction if, in fact, the consideration for the receipts can be attributed to the sources stated in the section. The High Court also noted the dictum of Continental Construction that it is the duty of the revenue and the right of the assessee to see that the consideration paid under the contract legitimately attributable to such information and services is apportioned, and the assessee is given the benefit of deduction available under the section to the extent of such consideration.8.5. The High Court further took note of a decision of Madras High Court in the case of Commissioner of Income Tax v. Khursheed Anwar: (2009) 311 ITR 468 (Mad) wherein the assessee had an exclusive agency for promoting and concluding sales contract in India for machinery and equipment for an enterprise based in Italy. On the strength of agreement, the assessee worked with the foreign enterprise but the Court observed that the benefit under Section 80-O of the Act was not available to the assessee for mere asking; the records and materials must support the claim and the benefit of the said Section cannot be claimed as a matter of right, it being a question of fact, which could be considered by the AO on the basis of the records. In that case, the Appellate Authority had recorded a specific finding that the assessee has simply effected the sale of machinery and spares manufactured by the foreign enterprise; and, therefore, the assessee received only the sales commission, which was not for any activities relating to technical or professional services and hence, the assessee was not entitled to claim deduction under Section 80-O of the Act.8.6. The High Court summed up the requirements, as emanating from the ratio of the decisions in Continental Construction and Khursheed Anwar (supra) as follows: -53. Both from Continental Construction and Khursheed Anwar we gather that not every receipt from a foreign enterprise in convertible foreign exchange does not (sic) automatically get qualified for deduction under Section 80-Othe nomenclature notwithstanding. The burden, in fact, is on the assessee to prove before the Revenue through cogent material that the commission is for the services it rendered falling within the scope of the section. Neither of the factsthe existence of the contract and the receipt of convertible foreign exchange. Having, thus, traversed through the provision of law applicable; the meaning of the expressions occurring in text thereof; and the position obtainable from the precedents, the High Court proceeded to examine the facts and, with reference to the aforesaid agreements of the appellant with French and Japanese companies respectively, held that some of the functions said to have been discharged by the assessee cannot qualify for deduction under Section 80-O of the Act; and in none of the appeals, the assessees had placed any material as regards the services they had rendered to qualify under that provision.8.8. While referring to Explanation (iii) to Section 80-O of the Act, the High Court held that mere transferring information abroad would not establish that the service is rendered from India and not in India; that all receipts cannot qualify for concession; that the range of services referred to in Section 80-O of the Act have the thread of connectivity in all the intellectual endeavours mentioned therein. The High Court summed up its discussion in the following passages:-56. To sum up, we wish to conclude that the Tribunal has erred on two counts in holding that the assessees are entitled to the benefit of deduction under Section. 80-O of the Act : First, mere transmission of the information to a foreign enterprise, evidently, abroad does not go to show that it is a service rendered from India, but not in India. With an element of certainty, we can as well say that once there is a contract, an Indian agent always interacts with and sends informationto a foreign enterprise abroad. If that alone qualifies for deduction without reference to the services rendered in India, the very expression in explanation (iii) becomes otiose. Trite it is to observe that statutory surplusage is not a settled canon of construction; rather it is to be avoided57. The purpose of the provision is to provide an incentive to the indigenous know-how of whatever nature that reaches the shores of foreign nations and gets applied there. The resultant fruits may percolate to India, too, as is the case in E.P.W. Da Costa and Continental Construction, even in which the Apex Court has held that not all receipts can claim the concession. If we refer back to the analogy employed by the learned senior counsel for the assessees, an advocate in India may render services to a foreign client stationed abroad concerning a case pending in India. It is a service rendered not only from India, but also in India. On the other hand, if that piece of professional advice is used abroad, even involving clients of Indian origin or laws of this nation as it happens in international arbitrations, the remuneration is qualified for the benefit58. Once we look at the range of services referred to in Section 80-O, we can discern the thread of connectivity in all the intellectual endeavours mentioned therein : any patent, invention, model, design, secret formula or process, or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided or agreed to be made available or provided to such Government or enterprise by the assessee. It can also be in consideration of technical or professional services rendered or agreed to be rendered outside India to such Government or enterprise by the assessee. They cannot be said to be entirely discrete and disparate. The services have an air of intellectuality; as such, all and sundry services rendered to a foreign enterprise cannot be taken into account, lest it should amount to doing violence to the explanation (iii).(emphasis in bold supplied)8.9. While concluding on the matter, the High Court referred to the dictionary meaning of the expression render and observed that rendering includes both providing and performing; and that in the context of Section 80-O of the Act, the services may be rendered in India but have to be performed on the foreign soil. The High Court also observed that, if the assessees had at all rendered certain services which qualify for deduction, they had failed to place any material in that regard; and the agreements in question only point out that the assessees were marine product procuring agents for the foreign enterprises without any claim for expertise capable of being used abroad rather than in India. Accordingly, the High Court answered the question of law in favour of revenue and set aside the orders passed by ITAT.The appellant M/s Laxmi Agencies - the appeal arising out of SLP (Civil) No.23699 of 2016 .38. This appeal involves similar claim of the other assessee firm M/s Laxmi Agencies, said to be engaged in similar business of rendering services to foreign buyers of Indian marine products. For the assessment year 1997-98, this assessee firm, while declaring total income of Rs. 31,81,180/-, claimed deduction under Section 80-O to the tune of Rs.21,84,302/-, being 50% of the net income of Rs. 43,68,604/- towards the service charges received from such foreign buyers.38.1. In the assessment order dated 31.01.2000, the AO noted the explanation of this appellant regarding the services rendered in the following:…..As per the detailed letter dated 22.11.1999 filed by the assessee the services rendered by it to the foreign enterprises are by way of :1. To impact 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 the assessees expert opinion and advise to them to enable them to take decisions for import from India;3. To keep close liaison with agencies such as EIA/Llyods/ SGS especially for organoleptic/bacteriological analysis and communicate the results of inspection along with assessees expert comments and advice. This also enables the foreign enterprises to take decisions for import from various sources from several countries available to them4. Making available full and detailed analysis of the seafood situation and prices for the above purpose5. 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 on regulate their import business from India6. To assist foreign buyers in negotiating and finalizing prices for Indian marine products and advise them of all rules and regulations and other related information for suchn the case of this appellant, again, the AO was of the view that the services were rendered in India and the service charges received from the foreign enterprises in respect of such services did not qualify for deduction under Section 80-O.38.2. In the case of this appellant, the Appellate Authority examined the terms of agreements with the foreign enterprises in detail and noted the contents thereof in the following paragraphs:-2.The appellant had entered into agreement with various foreign enterprises for render the following services. Article 2 of the agreement entered into with Neptune Fisheries Ind. USA reads as under:-(a) Locating reliable source of quality and assured supply of frozen sea-foods/marine products for the purpose of import by NEPTUNE and communicate its expert opinion and advice to the NEPTUNE;(b) In addition to the above services rendered by Laxmi it will also keep a close liason with agencies such as ELA/LLOYDS/SGS especially for organolotic/acteriological analysis and communicate the result of the inspection along with its expert comments and advice.

Reasoning:
14.2. The aspect germane to the present case is that forerunner to the provision relating to deduction of tax on royalties etc., received from certain foreign companies, was Section 85-C in the Act of 1961, that was inserted by Act No.13 of 1966 w.e.f. 01.04.1966 and was placed in Chapter VII. The said Section 85-C and several other provisions of Chapter VII were omitted by Section 33, read with Third Schedule, item 14, of the Finance (No.2) Act, 1967. The reason for omission of the said Section 85-C was that similar provision, with revised requirements, came to be introduced by way of Section 80-O in the new Chapter VI-A - .14.3. Section 80-O as introduced in Chapter VI-A got several modifications/alterations in regard to the entities eligible to claim such deductions as also the extent (that is percentage) of admissible deduction, but the core of object remained that of encouraging the export of Indian technical know-how and augmentation of the foreign exchange reserves of the country. While the relief was originally admitted in Section 80-O for dealing with a foreign company only, but later on, dealing with a foreign Government or foreign enterprise was included and thereby, the scope of coverage and activities was substantially expanded. However, as noticed from the erstwhile Section 85-C and the originally inserted Section 80-O, any such agreement with the foreign entity required the approval of Central Government and this requirement was later on altered to that of the approval of CBDT. Various other features and aspects related with the development and operation of Section 80-O, as then existing, were dealt with by the two circulars referred to on behalf of the revenue that is, Circular No. 187 dated 23.12.1975 and Circular No. 253 dated 30.04.1979.14.4 There had been several other modifications of Section 80-O from time to time. The relevant aspects noticeable for the present purpose are that the extent of deduction under Section 80-O was also altered from time to time and it even came to be allowed 100 per cent. but, by the Finance Act, 1984, it was reduced to 50 per cent. of the referred income. Then, the requirement of approval by CBDT was substituted by Finance Act, 1988 to the approval by Chief Commissioner or Director General. However, by Finance (No. 2) Act of 1991, even that requirement was deleted. In fact, the Finance (No. 2) Act of 1991 brought about a sea of changes in Section 80- O whereby, first and second provisos were omitted and the above- mentioned clause (iii) of Explanation was inserted. The words or a person (other than a company) who is resident in India were also inserted by this very Finance (No. 2) Act of 1991 expanding the reach of Section 80-O even to non-corporate tax payers. Moreover, the earlier expressions technical services were also altered to technical or professional services. There is no gainsaying the fact that Finance (No. 2) Act of 1991 led to a considerable recasting of Section 80-O of the Act of 1961 with substantial expansion of its ambit and area of coverage. These amendments were made applicable from the assessment year 1992-93 onwards and obviously, this had been the reason that the assessees like the appellant, who had earlier been taking the benefit of deduction under Section 80HHC with reference to their earning of foreign exchange, attempted to shift, for the purpose of deduction, to this provision of Section 80-O.14.6 In summation of what has been noticed hereinabove, it turns out that with the objectives of giving impetus to the functioning of Indian industries to provide intellectual property or information concerning industrial, commercial or scientific knowledge to the foreign countries so as to augment the foreign exchange earnings of our country and at the same time, earning a goodwill of the Indian technical know-how in the foreign countries, the provisions like Section 85-C earlier and Section 80-O later were inserted to the Act of 1961. Noteworthy it is that from time to time, the ambit and sphere of Section 80-O were expanded and even the dealings with foreign Government or foreign enterprise were included in place of foreign company as initially provided. The requirement of approval by the Central Government of any such arrangement was also modified and was ultimately done away with. Significantly, while initially the benefit of Section 80-O was envisaged only for an Indian company but later on, it was also extended to a person other than a company, who is resident of India. The extent of deduction had also varied from time to time.14.7. Broadly speaking, a few major and important factors related with Section 80-O of the Act of 1961, with reference to its background and its development, make it clear that the tax incentive for imparting technical know-how and akin specialities from our country to the foreign countries ultimately took the shape in the manner that earning of foreign exchange, by way of imparting intellectual property, or furnishing the information concerning industrial, commercial, scientific knowledge, or rendering of technical or professional services to the foreign Government or foreign enterprise, was made eligible for deduction in computation of total income, to the tune of 50 per cent. of the income so received. The finer details like those occurring in Explanation (iii) of Section 80-O were also taken care of by providing that the services envisaged by Section 80-O ought to be rendered outside India but they may be rendered from India, while making it clear that the services which are rendered in India would not qualify for such a deduction.15.1. So far the decision in the case of B. Suresh (supra) is concerned, it does not appear necessary to dilate on the same because the question involved therein was entirely different that is, as to whether the foreign exchange earned by transferring the right of exploitation of films outside India by way of lease was admissible for deduction under Section 80HHC of the Act, where the department attempted to contend that movies/films were not goods. However, having regard to the submissions made, we may look at the ratio from the other cited decisions in requisite details.17.3. In view of above and with reference to several other decisions, in Dilip Kumar & Co., the Constitution Bench summed up the principles as follows:-66. To sum up, we answer the reference holding as under:66.1. Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification66.2. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the Revenue66.3. The ratio in Sun Export case is not correct and all the decisions which took similar view as in Sun Export case stand overruled.(emphasis in bold supplied)17.4. Obviously, the generalised, rather sweeping, proposition stated in the case of Sun Export Corporation (supra) as also in other cases that in the matters of taxation, when two views are possible, the one favourable to assessee has to be preferred, stands specifically disapproved by the Constitution Bench in Dilip Kumar & Co. (supra). It has been laid down by the Constitution Bench in no uncertain terms that exemption notification has to be interpreted strictly; the burden of proving its applicability is on the assessee; and in case of any ambiguity, the benefit thereof cannot be claimed by the subject/assessee, rather it would be interpreted in favour of the revenue.In this regard, we may observe that deductions, exemptions, rebates et cetera are the different species of incentives extended by the Act of 1961 . In other words, incentive is a generic term and deduction is one of its species; exemption is another. Furthermore, Section 80-O is only one of the provisions in the Act of 1961 dealing with incentive; and even as regards the incentive for earning or saving foreign exchange, there are other provisions in the Act, including Section 80HHC, whereunder the appellant was indeed taking benefit before the assessment year 1993–94.19. Without expanding unnecessarily on variegated provisions dealing with different incentives, suffice would be to notice that the proposition that incentive provisions must receive liberal interpretation or to say, leaning in favour of grant of relief to the assessee is not an approach countenanced by this Court. The law declared by the Constitution Bench in relation to exemption notification, proprio vigore, would apply to the interpretation and application of any akin proposition in the taxing statutes for exemption, deduction, rebate et al., which all are essentially the form of tax incentives given by the Government to incite or encourage or support any particular activity.20. The principles laid down by the Constitution Bench, when applied to incentive provisions like those for deduction, would also 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. In view of the Constitution Bench decision in Dilip Kumar & Co. (supra), the generalised observations in Baby Marine Exports (supra) with reference to a few other decisions, that a tax incentive provision must receive liberal interpretation, cannot be considered to be a sound statement of law; rather the applicable principles would be those enunciated in Wood Papers Ltd. (supra), which have been precisely approved by the Constitution Bench. Thus, at and until the stage of finding out eligibility to claim deduction, the ambit and scope of the provision for the purpose of its applicability cannot be expanded or widened and remains subject to strict interpretation but, once eligibility is decided in favour of the person claiming such deduction, it could be construed liberally in regard to other requirements, which may be formal or directory in nature.21. As noticed, Section 80-O of the Act has a unique purpose and hence, peculiarities of its own. Applying the aforesaid principles to an enquiry for the purpose of a claim of deduction under Section 80-O of the Act as applicable to the present case, evident it is that for the purpose of eligibility, the service or activity has to precisely conform to what has been envisaged by the provision read with its explanation; and the other requirements of receiving convertible foreign exchange etc., are also to be fulfilled. It is only after that stage is crossed and a particular activity falls within the ambit of Section 80-O, this provision will apply with full force and may be given liberal application. The basic question, therefore, would remain as to whether the suggested activity of appellant had been of rendering such service from India to its principals in foreign country which answers to the description provided by the provision. As regards this enquiry, nothing of any liberal approach is envisaged. The activity must strictly conform to the requirements of Section 80-O of the Act.In our view, this part of criticism on behalf of the appellant on the approach of the High Court is entirely inapt and rather unnecessary. The referred observations in the majority view in Abhiram Singhs case occurred in relation to the interpretation of Section 123(3) of the Representation of People Act, 1951, which is aimed at curbing the unwarranted tendencies of communalism during election campaign and operates in entirely different fields of social welfare and ethos of democracy.22.2. In the setup of the present case, for a proper comprehension of the contents and text of the relevant provision of Section 80-O and Explanation (iii), which are carrying even the minute distinction of the expressions from India and in India, recourse to lexical semantics has been inevitable. However, in all fairness, the High Court has not only discussed semantics and dictionary meanings but, has equally looked at the object and purpose of Section 80-O of the Act. Hence, without further expanding on this issue, suffice it to say for the present purpose that the submissions against the approach of High Court with reference to the decision in Abhiram Singh (supra) does not advance the cause of the appellant.24.3. Though it has been painstakingly contended on behalf of the appellant that the decision in J.B. Boda & Co. should be decisive of the matter because even the brokerage of a reinsurance broker was held eligible for deduction under Section 80-O of the Act but, we are afraid, the said decision has no relevance whatsoever to the question at hand. The eligibility of the concerned services of reinsurance broker for the purpose of Section 80-O was not even a question involved therein. Needless to observe that the business of insurance carries its own peculiarities where the factor of risk involved is of unique significance; and any information and assessment of risk involved is itself a specialised task related with the business of insurance. In the fact sheet of the case in J.B. Boda & Co., in the every opening paragraph of judgment, it has been distinctively recorded that in respect of the insurance risk covered by Indian or foreign insurance companies, the appellant had been arranging for the reinsurance of a portion of risk with various reinsurance companies either directly or through foreign brokers. As regards, the services of the appellant with a broker in London, the Court noted, inter alia, that the appellant furnished all the details about the risk involved, the premium payable, the period of coverage and the portion of the risk which is sought to be reinsured. Without entering into further details of the activities of the said assessee, suffice it to say for the present purpose that the submissions on behalf of the appellant, as if the task of a broker of reinsurance is not technical in nature, could only be rejected as being not in conformity with the peculiarities of insurance business. In any case, as observed hereinbefore, this aspect does not require further elaboration because of entirely different question involved and decided by this Court in J.B. Boda & Co.25.4 The decision in E.P.W. Da Costa, again, does not make out any case in favour of the appellant.26.3. The case of B.L. Passi (supra) had not been a matter where nothing at all was on record. Indeed the letters exchanged by the assessee with the principal were on record, but the core of information that was allegedly supplied by the assessee to the foreign company, was not furnished, nor it was shown as to how that information was utilized by the foreign company and further, it was also not shown as to how the service charges payable to the assessee were computed when it was to get the payment on the basis of sale to be made by the foreign company. These crucial facts and factors directly co-relate with the requirements of Section 80-O of the Act; and upon the assessee failing to meet with such requirements, the claim for deduction under Section 80-O failed.28. As noticed, in the present case, in the very first place, the Assessing Officer, while dealing with the assessment in question, raised the queries and sought clarifications from the appellant with reference to the enunciations in the decision of this Court in the case of Continental Construction (supra). Then, the High Court has also noticed in its impugned judgment that this was one of the decisions relied upon by the learned counsel for the assessee. A comment has been made in the reply submissions on behalf of the revenue before us that the appellant has given up reliance on this decision for the reasons that the ratio essentially operates against the appellant. The response on behalf of the appellant has been that reference to this decision by revenue was entirely unnecessary for the same not being relied upon. Needless to observe that it being a decision of this Court, the ratio and the principle emanating therefrom cannot be ignored, whether relied upon by the appellant or not. Moreover, the said decision has been rendered by a 3-Judge Bench of this Court and has the force of a binding precedent. Having regard to the submissions made and the questions raised, reference to the decision of this Court in the case of Continental Construction (supra) is indispensable.28.4. A few aspects at once emerge from the said decision in Continental Construction that even under the provisions of Section 80-O of the Act as then existing, whereunder prior approval of CBDT was required to claim deduction, this Court underscored that deduction would be available only in relation to the consideration attributable to the information and services envisaged by Section 80-O and deduction would be granted to the extent of such consideration; and all these aspects were to be examined by the Assessing Officer while making the assessment.29. In the impugned judgment, the decision of High Court of Madras in the case of Khursheed Anwar (supra) has also been taken note of. Therein too, the claim for deduction under Section 80-O of the Act was declined for want of necessary material while observing that the benefit of Section 80-O cannot be claimed by merely asking for the same; it has to be substantiated with the requisite record. In the said case, on the query of the Assessing Officer, the assessee had submitted its reply but could not furnish the material so as to bring the case within the four corners of Section 80-O of the Act. The High Court, inter alia, observed as under (at p. 474 of ITR):Having regard to the above discussions, in our view, as the assessee has not established his claim for deduction by producing the relevant records, the Tribunal has erred in reversing the finding of the Commissioner of Income-tax (Appeals) rendered on the basis that the assessee was not entitled to the benefit in view of the fact that the commission received by the assessee was not for any of the activities mentioned in paragraph 4.1 of the order of the Commissioner of Income-tax (Appeals). There is absolutely no reason adduced by the Tribunal to reverse the said finding. We must also mention here that during the course of arguments, as we found that there were no supporting materials for the claim, we directed the assessees counsel to produce the materials, if any, available for our perusal. The learned counsel for the assessee, though had produced the explanation of the assessee dated March 28, 1998, he was unable to produce any materials to sustain any of the contentions made in the said letter. In the absence of any materials to show that what was passed on to the foreign enterprise was the information concerning with commercial or technical or scientific aid, merely because an agreement is entered into between the assessee and the foreign enterprise, we are not inclined to accept the claim of deduction under section 80-O of the Act. Accordingly, the second substantial question of law is answered in favour of the revenue and against the assessee. The tax case appeal is allowed in part. No costs.. From the decisions aforesaid, it could be immediately culled out that for bringing any particular foreign exchange receipt within the ambit of Section 80-O for deduction, it must be a consideration attributable to information and service contemplated by Section 80-O; and in case of a contract involving multiple or manifold activities and obligations, every consideration received therein in foreign exchange will not ipso facto fall within the ambit of Section 80-O. It has to be attributable to the information or service contemplated by the provision and only that part of foreign exchange receipt, which is so attributable to the activity contemplated by Section 80-O, would qualify for claiming deduction. Such enquiry is required to be made by the Assessing Officer; and for the purpose of this imperative enquiry, requisite material ought to be placed by the assessee to co-relate the foreign exchange receipt with information/service referable to Section 80-O. Evidently, such an enquiry by the Assessing Officer could be made only if concrete material is placed on record to show the requisite co- relation.31. Coming to the facts of the present case, the agreements of the appellant with the foreign entities primarily show that the appellant was to locate the source of supply of the referred merchandise and inform the principals; to keep liaison with the agencies carrying out organoleptic/bacteriological analysis and communicate the result of inspection; to make available to the foreign principals the analysis of seafood supply situation and prices; and to keep the foreign principals informed of the latest trends in the market and also to negotiate and finalise the prices. As per the agreements, in lieu of such services, the appellant was to receive the agreed commission on the invoice amounts.32. In contrast to what has been observed in the cases of J.B. Boda & Co. (advising on the risk factor related to the proposed insurance/reinsurance) and E.P.W. Da Costa (dealing with statistical analysis of data collected), what turns out as regards the activities/services of the appellant is that the appellant was essentially to ensure supply of enough quantity of good quality merchandise in proper packing and at competitive prices to the satisfaction of the principals. This has essentially been the job of a procuring agent. Though the expressions expert information and advice, analysis, technical guidance etc., have been used in the agreements but, these expressions cannot be read out of context and de hors the purpose of the agreement. 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. All other services or activities mentioned in the agreements were only incidental to its main functioning as agent. 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. Viewed from any angle, the services of the appellant were nothing but of an agent, who was procuring the merchandise for its principals; and such services 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 under Section 80-O of the Act. In other words, in the holistic view of the terms of the agreements, we have not an iota of doubt that the appellant was only a procuring agent, as rightly described by the High Court.33.1. In both the agreements, the default clauses make it more than clear that if the quality of goods was found to be unsatisfactory to the principals after inspection in their respective countries, they shall have no responsibility to pay the agents fees. If at all it had been a matter of the appellant furnishing some technical or material information which served the foreign enterprises in making the decision for procurement, in the ordinary circumstances, after completion of such service and its utilization by the foreign enterprises, the appellant was likely to receive the professional service charges for furnishing such information but, contrary and converse to it, the agreements provide for no payment to the appellant in case of principal being dissatisfied with goods. These default clauses effectively demolish the case of the appellant and fortify the submissions of the revenue that the appellant was merely a procuring agent and nothing more.34. The matter can be viewed from yet another angle, as indicated by the High Court in the last paragraph of its judgment. If at all it be assumed that out of various tasks mentioned in the agreements, some of them involved such services which answered to the requirements of Section 80- O, it was definitely required of the appellant to establish as to what had been 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. Obviously, the appellant did not supply such particulars. As noticed, the High Court posed a pointed query to the learned counsel appearing for the appellant as to whether all the services mentioned in the agreement would come within the purview of Section 80-O. The cryptic response to this query on behalf to the appellant had been that if the recipient of services is situated outside, all the services rendered by the assessee in terms of the agreement come within the sweep of the provision. It was specifically contended on behalf of the appellant that establishing which of its services qualifies for the deduction is of no consequence, rather unnecessary. In our view, this response was not in conformity with the requirements of Section 80-O of the Act, as explained and applied by this Court in Continental Construction and in B. L. Passi (supra) as also as applied by Madras High Court in Khursheed Anwar (supra). Rather, this stand, in our view, puts the final curtain on the appellants case because most of the services in the agreements in question were those of an agent ensuring supply; and if any part of the services co-related with Section 80-O, the particulars were of utmost significance and were fundamentally necessary which the appellant had never supplied. Merely for having a contract with a foreign enterprise and mere earning foreign exchange does not ipso facto lead to the application of Section 80-O of the Act.35. The effect of Circular No.700 dated 23.03.1995 is only to the extent that once the service is rendered from India, even if its ultimate use by the foreign enterprise occurs in India, the matter may not go out of Section 80- O of the Act. This clarification is in tune with the nature of this provision meant for extending incentive but it does not do away with the basic requirements that to qualify for deduction under Section 80-O, the service must be rendered from India to foreign enterprise and the nature of service ought to be as delineated in Section 80-O. Ultimate use of the service could be in India, as illustrated by the case of E.P.W. Da Costa (supra) and by the cases of Li & Fung and Chakiath Agencies (supra) that were cited before the High Court. However, the claim of the appellant fails at the threshold for the reasons foregoing. Circular No.700 dated 23.03.1995 is neither of any application to this case nor of any assistance to the appellant. The appellant is not entitled to claim deduction under Section 80-O of the Act.36. For what we have discussed hereinabove, it is also apparent that the Appellate Authority as also the ITAT had viewed the present case from an altogether wrong angle. As noticed, the Appellate Authority even did not comprehend the observations in E.P.W. Da Costa (supra) and assumed that every information is scientific knowledge. On facts, the Appellate Authority observed that even if acting as agent of the foreign enterprises, the appellant was locating the sources of frozen seafoods, bringing the foreign enterprises in contact with the manufacturers or processors of seafood, and negotiating with the local packers; and these activities, though carried out in India, had been on behalf of the foreign enterprises. The ITAT, though took note of different services contemplated by the agreements in question and even observed that the clauses like those requiring the appellant to settle the claim with manufacturers might be the services rendered in India but then, proceeded to assume, without any cogent material on record, that other services were rendered from India and on that basis, the foreign party took its decision. Even in this regard, the questions relevant and germane to the enquiry were not even gone into inasmuch as, it was not examined as to what and which part of the consideration was attributable to the services envisaged by Section 80-O of the Act, which were rendered from India. Therefore, the findings of the Appellate Authority and ITAT, being based on irrelevant considerations while ignoring the relevant aspects, were neither of binding nature nor could have been decisive of the matter. Hence, neither anything turns upon the submissions made on behalf of the appellant with reference to the decision in K. Ravindranathan Nair (supra) nor this aspect requires any further discussion.37. In our view, the High Court has rightly analysed the entire matter with reference to the relevant questions and has rightly proceeded on the law applicable to the case. The impugned judgment calls for no interference.The appellant M/s Laxmi Agencies - the appeal arising out of SLP (Civil) No.23699 of 2016 .38.5. Although, from the fact sheet of this case, it does not appear if the agreements of this appellant also carried the default clauses as we have noticed in the lead case but, on all other major features, the agreements had been of the same nature and again, this appellant has also failed to bring any material on record to show if it had received any specific consideration referable to the activities envisaged by Section 80-O of the Act. In the given set of facts and circumstances, this appellant also turns out to be only a procuring agent and not beyond. Hence, this appeal also deserves to be dismissed.