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TMI Blog2003 (7) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... greement with the petitioner in the matter of providing consultancy services. There are various clauses seen in, the agreement. An application was made to the Government in the matter of approval of the agreement. The agreement was approved subject to a condition. The conditional approval reads as under: "The approval for exemption is limited proportionally to the stay and work abroad with the total amount received by applicant." On receipt of the same, the petitioner sought for reconsideration. In the absence of any positive response, the petitioner is knocking at the doors of this court for justice. The respondents have entered appearance. They oppose the prayers. Writ Petitions Nos. 23605-606 of 2001 are filed by Sri B.K. Sinha seeking for a writ of certiorari to quash annexure C, dated August 17, 2000 and annexure E, dated February 19, 2001. Italab (Japan) Ltd., entered into an agreement with the petitioner in the matter of availing of the services of the petitioner in the light of his expertise in the international market. An application was filed seeking for approval under section 80RRA(2)(ii) of the Income-tax Act. It was rejected in terms of annexure C. A representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived by him in exercise of his profession from a Government of a foreign State. A certificate is required to be furnished in the prescribed form. Section 80RRA with which we are concerned provides for deduction in respect of remuneration received for services rendered outside India. For proper understanding, it is necessary to cull out the section itself. "Where the gross total income of an individual who is a citizen of India includes any remuneration received by him in foreign currency from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the individual, a deduction from such remuneration of an amount equal to 75 per cent. of such remuneration, as is brought into India by or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf." A combined reading of all these provisions would show that deduction is permissible in certain circumstances. Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Government went in appeal to the Supreme Court. The Supreme Court, after noticing these provisions ruled that "there is no warrant in the section to restrain the remuneration received from a foreign employer only to the salary received by an employee". It also ruled that: "an analysis of section 80RRA reveals that in order to be entitled to deductions at the rate enumerated in the section by the respondent, the sum must be (i) remuneration, (ii) received by him in foreign currency, (iii) from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India." And the Supreme Court also ruled that: "Mr. Palkhivala, appearing for the respondent, pointed out that the object of section 80RRA of the Act was manifestly to encourage, firstly, earning of foreign exchange by India, secondly, bringing that currency by Indian nationals from abroad to India and thirdly, to improve the status of the Indians abroad and increasing the market of Indian technicians. It appears to us to be plausible objects in the present socio-economic context." The Delhi High Court in the case of C.S. Mathur v. CBDT has considered this provision in the judgment r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit on the assessee like the petitioner. In our opinion, the theory of extending and conferring on the assessee the higher of the two benefits spelt out by the two provisions would apply." The Bombay High Court in Taru Jethmal Lalvani v. Secretary, Ministry of Finance (Department of Revenue) [1990] 185 ITR 418 has considered this very question. In that case, the petitioner entered into an agreement with a foreign company. Approval was rejected. The High Court notices the Bombay High Court in Aditya V. Birla's case [1988] 170 ITR 136 and thereafter ruled as under: "On going through the provisions of section 80RRA carefully, it is seen that the section does not require rendering of any service outside India as a technician. What it requires, inter alia, is that the services must be rendered outside India and the person who renders such services is a technician within the meaning assigned to it in Explanation (c) thereto...." The Delhi High Court in the case of Mahendra Raj v. Joint Secretary, Government of India [2002] 257 ITR 569 has noticed Aditya V. Birla's case [1988] 170 ITR 137 (SC) and thereafter ruled as under: "On a bare perusal of the section, it will be clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 80RRA. These various judgments of various courts support my view. The narrow interpretation so placed by the Revenue is consistently rejected in one form or other by all courts. I am unable to accept the "restricted" arguments as pleaded by Dr. Krishna, appearing for the Revenue, in the case on hand. Dr. Krishna, learned counsel, however invites my attention to the history of deductions. He filed a memo explaining the case on hand. Section 80RRA came into effect on April 1, 1975, in terms of the Finance (No. 2) Act, 1977. The benefit was extended to the Indian employees working abroad. The Finance Act of 1987 increased the deduction from 50 per cent. to 75 per cent. of the foreign exchange brought into India, with effect from April 1, 1991. The proviso to sub-section (1) was deleted. The Finance (No. 2) Act of 1996 amended the special deduction with foreign exchange remitted into India. Dr. Krishna, refers to section 80-O to contend that notwithstanding the availability of section 80-O, section 80RRA was introduced and on this basis, he wants the court to give a narrow interpretation to the section. It is to be noticed at this stage that the Explanation is available in sect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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