H. RAGHAVENDRA RAO Vs. DEPUTY COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee filed this appeal under section 260A of the Income -tax Act, 1961 (for short "the Act"), challenging the order dated July 13, 2007, made in I.T.A. No. 82/Bang/2005 passed the by the Income -tax Appellate Tribunal, Bangalore Bench "A" (for short "the Tribunal"), dismissing the appeal filed by the assessee confirming the order passed by the authorities below in respect of deduction under section 80 -O of the Act, for the assessment year 1997 -98. The assessee, in the status of an individual, filed return of income for the assessment year 1997 -98 declaring the total income of Rs. 5,23,576 on October 29, 1997, and claimed deduction under section 80O of the Act. The said return was processed under section 143(1) of the Act on March 26, 1998. Subsequently, the Assessing Officer issued notice dated September 27, 2000, under section 148 of the Act for reopening the assessment. On receipt of the notice, the assessee, vide letter dated October 13, 2000, requested the Assessing Officer to treat the returns filed on October 29, 1997, as the returns filed in response to the notice under section 148 of the Act. Further, requested the Assessing Officer to furnish a copy of the reason recorded for initiating reassessment proceedings. In pursuance of the notice, an authorized representative of the assessee appeared and produced necessary documents and argued the matter. The Assessing Officer after hearing the matter on various dates held that the assessee is not entitled for the benefit of deduction under section 80 -O of the Act since the assessee has rendered service in India as per Explanation (iii) to section 80 -O of the Act. Accordingly, by his order dated December 26, 2001, reassessed the income of the assessee under section 143(3) of the Act and demanded interest under sections 234B and 234C of the Act.

(2.) THE assessee being aggrieved by the reassessment order dated December 26, 2001, passed under section 143(3) of the Act preferred an appeal before the Commissioner of Income -tax (Appeals) -II, Bangalore (for short 'the appellate authority') on various grounds. The appellate authority, after re -examining the matter and taking into consideration the retainer agreement entered into between the assessee and M/s. Buckeye Corporation P. Ltd. held that in view of Explanation (iii) to section 80 -O, the assessee is not entitled for the relief and dismissed the appeal by his order dated October 25, 2004.

(3.) THE instant appeal was admitted for considering the following substantial questions of law: