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Issues involved: Interpretation of agreements for tax approval u/s 80-O of the Income Tax Act.
Summary: The petitioner, a private limited company, entered into nineteen agreements with parties in different countries for recruitment services. The petitioner sought approval under s. 80-O of the Income Tax Act, which was refused by the CBDT. The High Court reviewed the agreements and applications, concluding that the petitioner's work did not qualify for the tax incentive. The petitioner's role was deemed as that of an employment or recruiting bureau, providing information on candidates within India. The Court found that the nature of the work did not meet the criteria of providing industrial, commercial, or scientific knowledge u/s 80-O. Additionally, the work was entirely conducted within India, not meeting the requirement of making knowledge available for use outside India. The Court emphasized that the purpose of s. 80-O is to encourage Indian companies to export their know-how abroad, which was not met by the petitioner's activities. The Court rejected the petitioner's contentions, stating that the interpretation should align with legislative intent. The Board's decision to deny approval was upheld as correct and legal, preventing evasion of tax deductions. Ultimately, the petition was dismissed.
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