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Issues: Whether the CBDT is liable to grant approval to the petitioner's agreement under section 80-0 of the Income Tax Act, 1961.
Summary: The petitioner-company, incorporated under the Companies Act, 1956, conducted scientific tests in its research laboratory in India for G. D. Searle & Co., a U.S.-based company importing psyllium husks from India. An agreement was made between the petitioner and G. D. Searle & Co. on 1st January, 1975, requiring the petitioner to carry out tests and certify that each lot of psyllium husk conformed to specified standards. The petitioner applied for approval of this agreement under section 80-0 of the Income Tax Act, 1961, which was rejected by the CBDT on the grounds that the technical service was not rendered outside India. The petitioner challenged this decision in a writ petition, which was summarily rejected by a single judge. The appeal was made to the High Court. Upon review, it was found that the work done by the petitioner was to render a technical service by conducting tests and certifying conformity to specifications, all carried out in India. The agreement clearly outlined these technical services to be provided by the petitioner in India. The court concluded that the petitioner's actions constituted technical services under the agreement, and since the testing and certification were done in India, section 80-0 was not applicable. The court dismissed the appeal, upholding the single judge's decision, and rejected the petitioner's reliance on a previous judgment that was deemed irrelevant to the current case. The appeal was dismissed with costs.
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