This appeal is by the Revenue, challenging the order passed by the Tribunal which has disallowed the deduction of Rs.64,75,373/- being the fee received towards developmental work in computing the profits of the business under Section 80HHC of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

2. The assessee is public limited company carrying on business of manufacturing and sale of automobile parts like spark plugs, fuel injection equipment etc. For the year 1994-95 the appellant received Rs.64,75,373/- as fees towards developmental work from M/s. Robert Bosch, Germany. The assessee claimed deduction under Section 80-O of the Act, which was granted. For the purpose of deduction under Section 80-HHC of the Act, the assessing officer deducted 90% of the above amount applying the provisions of explanation (baa) to Section 80HHC of the Act. The assessee contended that the proviso to explanation (baa) could be applied only to those items which are specifically mentioned therein. The technical service fees received from Bosch was not one of such specified items. Over ruling the said objection, the assessing officer held that it is consideration flowing to the as