Saluja J.M. - the assessee is in appeal against the order of CIT(A)-XVII, New Delhi dated 6-6-1994 mainly on the ground of disallowance of the Claim for deduction of Rs. 14,74.272 under section 80-O of the Income-tax Act.

2. The assessee filed the return of income on 30-10-1992 declaring nil income. the case was processed under section 143(1)(a) on 19-2-1993 and it was selected for scrutiny to vouch-safe the correctness of claim of deduction under section 80-O to the extent of Rs. 14,74,262. A notice was issued under section 143(2) and the assessee filed information/details and documents like copies of agreements etc. The Assessing Officer observed that the assessee was carrying on brokerage activities under the name and style of M/s. Interocean Company, 75 Link Road, New Delhi and that the assessee was a ship broker of the foreign ship-owners/ship charteres and received a specified commission @ 1.25% out of the hire charges remitted by the Indian clients to foreign ship-owners/charters in accordance with the agreements. He also observed that the agreements were being signed by the assessee for each transaction of hiring ships on behalf of the foreign ship-owners/charterers as their brokers.

2.1 The Assessing Officer proceeded to examine as to whether the service provided by the assessee qualified for deduction under section 80-O of the Income-tax Act, 1961. He examined the guidelines for approval of agreements laid down in the Circular No. 253 dated 30-4-1979 issued by the Central Board of Direct Taxes. The Assessing Officer observed that in the said circular, with reference to information concern- ing indusrial, commercial or scientific knowledge, experience or skill made available or provided or agreed to be made available or provided, it is mentioned that such information should not be merely of statistical type collected or collated form commercial or scientific journals or other commonly available sources of information, but it should be information concerning the industrial, commercial or scientific knowledge, experience or skill processed or developed by Indian Party. The Assessing Officer further noted that the technical services rendered or agreed to be rendered to the foreign party should relate to productive fields such as (a) mining, or (b) generation or distribution of electricity or any other form of power, or (c) engineering services, and services such as those relating to management, organisation, sales, finance and accounts will not qualify for the said purpose. The circular also mentioned that technical services which were rendered in India would not qualify for the said purpose. The said circular further provided that the agreements providing for participation in business and management operations abroad simpliciter in return for a specified percentage of commission or profits will not be eligible for approval. The Assessing Officer further observed that although the said circular covered the period when the approval was to be granted by the CBDT, which had been discontinued with effect from assessment year 1992-93, but the instructions mutates mutandis apply as the same had not been superseded by any subsequent instructions on the subject. The Assessing Officer further observed that the assessee was signing the agreements for the limited purpose of liaisoning for a specified percentage of commission as a broker of the foreign ship-owners/charterers who supplied him ready-made information of all kinds regarding ships, their loading capacity etc. and the Indian clients pass on all the information regarding their cargo and their destinations etc. He went on to observe that gathering of information regarding ports, the handling capacity and weather conditions etc. is available to the assessee easily from the commonly available sources and that the assessee’s liaisoning is over, the moment the agreement was signed and the specified percentage of brokerage was quantified and incorporated in the agreements. H