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Issues:
1. Whether the petitioner is entitled to the benefit under section 80-O of the Income-tax Act, 1961, in regard to the royalty paid under the agreement. 2. Whether training of Nigerian personnel in India and the training fee paid would be entitled to deduction under section 80-O of the Act. Analysis: The petitioner entered into an agreement with the Federal Military Government of Nigeria involving technical information, know-how, designs, and training of Nigerian personnel. The first respondent declined approval for deduction under section 80-O of the Act, considering the royalty payment and training fees as trade restrictions. The first question addressed whether the royalty payment under the agreement falls within the scope of section 80-O. The court held that the agreement did not impose any trade restriction but granted positive rights to Nigeria, making the royalty payment eligible for deduction under section 80-O. Regarding the second question, the petitioner argued that training Nigerian personnel in India did not constitute technical services under section 80-O. The court analyzed the provision, emphasizing that the skill imparted should be made available by the assessee for use outside India to qualify for deduction. As the skill of the trained personnel was utilized outside India, not that of the assessee, it did not meet the criteria for deduction under section 80-O. The court upheld the Board's decision on this aspect. Consequently, the court partially allowed the petition, quashing the Board's refusal to grant approval for deduction on the royalty fee under the agreement. The court directed the Board to approve and allow the deduction for the royalty payment.
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