Law: Income Tax Act, 1961

Section: 80-O

Section 80-O of the Income-tax Act, 1961 - Deductions - Royalties, etc., from certain foreign enterprises - EPI, Indian company, wholly owned by Union of India entered into an agreement with Kuwait Government for setting up a project in Kuwait - EPI appointed company 'G' as a contractor to carry out certain works relating to aforesaid project - Under the agreement, inter alia, (i) employer was to be Government of Kuwait, (ii) all services were to be rendered in Kuwait, (iii) G's work was to be checked by Kuwait Government's architects, and (iv) G had to comply with Kuwait's labour and other laws as well as Income-tax Laws - Whether income received by G in Kuwaiti Dinars in Kuwait was income by way of royalty, commission, fees or other similar payment received by it from and qua a foreign enterprise in consideration of technical services rendered outside India to a foreign Government within meaning of section 80-O - Held, on facts, yes Facts The petitioner-company 'G' was engaged in civil and mechanical engineering, construction works, export and rendering technical consultancy services in India and abroad. Another company EPI, registered under the Indian Companies Act, was wholly owned by the Union of India and its objects were, inter alia, to undertake engineering construction and projects, both in India and abroad. As a part of its foreign business and enterprise at Kuwait, where EPI had an office, it entered into an agreement with the Government of Kuwait for setting up a project in Kuwait. Under the contract, EPI was entitled to associate with various other contractors to undertake and carry out different parts of the said project for the Government of Kuwait. In pursuance thereto, company 'G' was selected as one such contractor by EPI and an agreement was entered into between them under which G had to carry out certain works relating to the aforesaid project as an associate of EPI. Under the agreement, (i) the employer was to be the Government of Kuwait, (ii) all technical and other services were to be rendered in the foreign country, (iii) the completion date was to be when EPI received from the Government of Kuwait in writing that it had satisfactorily…

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