9911796707
TMI Blog1986 (2) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... is not a technical service as contemplated under section 80-0 of the Act. Thus, it will appear from the above communication that the "approval " was refused by the authorities on the ground that the loaning of services of the engineers and the draughtsmen for service abroad was not a " technical service " as contemplated under section 80-0 of the said Act of 1961, although no detailed reasons have been given in the said communications. It would be convenient for me to set out the relevant portions of section 80-0 of the said Act of 1961, hereinbelow : " 80-O. Where the gross total income of an assessee, being an Indian company, includes any income by way of royalty, commission, fees or any similar payment received by the assessee from the Government of a foreign State or a foreign enterprise in consideration for the use outside India of any patent, invention, model, design, secret formula or process, or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided or agreed to be made available or provided to such Government or enterprise by the assessee, or in consideration of technical ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g staff made by Sim-Chem Ltd., a foreign company, to the petitioner. In particular, he had drawn my attention to Item No. 1, i.e., work, design engineering and technical services for North Sea Oil or other projects. He has also referred to clause 8 of the said agreement, where the terms of accommodation and the mode of payment were referred to, which runs as follows: " 8. Accommodation and payment: Sim-Chem will provide each man with free boarding and accommodation furnished to a reasonable extent during his period in the U.K. As far as possible the accommodation will take the form of flats shared by 2, 3 or 4 individuals, but the allocation of individuals sharing flats will be the responsibility of the Team Leader. Sim-Chem will also provide free bedding, kitchen utensils, crockery and cutlery, and will be the final arbiter in regard to the standard of accommodation provided. 8.1 Sim-Chem will pay SGIL a sum of 25 pounds per week per draughtsman. Overtime will be based at 50 pounds per week. 8.2 Sim-Chem will pay SCIL an amount of 35 pounds per week per engineer. Overtime will be based at 70 pounds per week." After referring to such terms, Dr. Pal has referred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al engineers in most of the technical fields and by execution of large projects. Dr. Pal further submitted that on the basis of the aforesaid materials available before the Central Board of Direct Taxes, there was no room for arriving at the relevant satisfaction, namely, as to the loaning of services of engineers and draughtsmen for service abroad. It was " not a technical service " as contemplated under section 80-0 of the said Act and accordingly such finding being perverse and based on " no evidence " at all, the same should be struck down by this court by issue of appropriate writ. The counsel for the petitioner further said that if any instruction in the present case, viz., the Circular No. 187 dated December 23, 1975, in particular, clause (vi) thereof, is inconsistent with the provisions of section 80-0 of the Income-tax Act, 1961, for not granting approval, then, to that extent, the said circular may be declared void by this court as admittedly the circular cannot override the provisions of the enactment. The said Circular No. 187 dated December 23, 1975, which has given power to the Central Board of Direct Taxes to refuse grant of approval, under section 80-0 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration thereof, certain fee would be payable to the Indian company. Shri Makhijani and Shri Sirkar argued at length that these engineers and draughtsmen actually prepared designs and data which were made use of for the North Sea Oil Project. However, the agreement gave no indication whatsoever of the nature of the design or engineering data which the assessee company was to supply. On the other hand, the agreement spoke only of the services of engineering staff being made available to the U.K. company. An agreement of this type is clearly ineligible for approval under section 80-0, as indicated in para. 3(vi) of the Board's Circular No. 187." After referring to the aforesaid note, Mr. Pal submitted that mere supply of the engineers and draughtsmen outside India does not come within the condition or guidelines laid down in Circular No. 187 ([1976] 102 ITR (Statutes) 83) as stated hereinabove. After going through the original record, which was produced by Mr. Nandalal Pal on January 30, 1986, I do not find anything new apart from the facts disclosed in paragraph 10(b) of the affidavit-in-opposition. It appears from the impugned memo dated January 4, 1977, that gist of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, the petitioner company was entitled to approval of the agreement under the first part of section 80-0, inasmuch as it was making available the information concerning industrial, commercial or scientific knowledge, experience or skill to the foreign company. The Division Bench judgment of the Delhi High Court in Oberoi Hotels (India) Pvt. Ltd. v. CBDT [1982] 135 ITR 257, applies with full force to the facts of the present case. Accordingly, the writ petitioner is entitled to succeed. The impugned order communicating refusal to grant approval dated January 4, 1977(annexure " K ") is accordingly set aside by appropriate writ. The respondents are further commanded to act and proceed in accordance with law and to consider the application for grant of approval of the petitioner in accordance with law. On the facts and circumstances of the case, there will be no order as to costs. Rule is made absolute. On the prayer of Mr. R. C. Prosad, learned advocate appearing on behalf of the respondents, operation of the judgment and order shall remain stayed for a period of six weeks from date, subject to continuance of the interim order granted by this court at the time of issuanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
