Law:

Section:

Section 80-O of the income-tax act, 1961-deductions-royalties, etc., from foreign enterprises-petitioner-company, under agreement with a foreign company which imported psyllium husk from india, carried out quality control tests in its laboratories in india in respect of husk imported by said foreign company and forwarded results to foreign company for specified consideration-whether what petitioner did was rendering technical service in india and not outside india, so that agreement in question did not attract section 80-O-held, on facts, yes Facts The petitioner-company carried out scientific tests in its research laboratory in India. Under an agreement with an American company which imported psyllium husks from India, the petitioner, for a certain consideration, was required,inter alia, ( i) to carry out such tests in its laboratory in India as were necessary to establish that each lot of psyllium husk conformed to the specifications of that foreign company, and (ii) to forward the results of such tests to the foreign company. The petitioner's application for approval of the agreement under section 80-O was rejected by the CBDT on the ground that the technical services involved were not rendered by the assessee outside India. The writ petition filed by the assessee against the rejection was dismissed by the Single Judge of the High Court. On writ appeal: Held Clearly, the work, which the petitioner was required to do under the agreement in question, was to render a technical service by carrying out certain tests and certifying that each lot of psyllium husk conformed to the specifications of the foreign party. In other words, all that the petitioner did was to send to the foreign company the test results with the requisite certificate whether the article fell within the required specifications. Indisputably, the testing and certification were done by the petitioner in India and not outside India so as to attract the provisions of section 80-O. The appeal was, consequently, dismissed. Case referred to E.P.W. Da Costa v. Union of India [1980] 121 ITR 751 (Delhi). Judgment LENTIN, J. -Amongst its other activities the petitioner company, which is incorporated…

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