Law:

Section:

Section 80-O of the Income-tax Act, 1961 - Deductions - Royalty, etc. from certain foreign enterprises - Assessment year 1971-72 - Whether for purpose of obtaining relief under section 80-O, requirement of approval of agreement with foreign company is mandatory, and, no relief can be granted by assessing authority or appellate authority in absence thereof - Held, yes - Whether approval cannot be presumed by authorities as law requires specific approval by CBDT (i.e., Board) - Held, yes - Whether, therefore, where Board had rejected assessee's application for approval of agreement and said order was never set aside or quashed as no writ petition was filed by assessee to impugn said order of rejection, Tribunal could not dispense with statutory requirement of approval of agreement to grant deduction under section 80-O - Held, yes FACTS The assessee entered into an agreement with a corporation in Malaysia. It made an application to the Government for approval of said agreement as required by section 80-O. The government of India referred the matter to the Central Board of Direct Taxes. (Board). The Board rejected the assessee's application. Therefore, the assessee made a representation to the Board for reconsideration of its decision. The Board rejected the representation of the assessee and informed it that the Board saw no reason to reconsider its earlier decision. The assessee had prepared a sugar project report for the said foreign company and received certain amount towards the technical fees in consideration of the services rendered by it. The assessee claimed tax concession in respect of the said amount under section 80-O. The ITO held that for want of approval of the agreement by the Government, the assessee could not avail of relief under section 80-O. On appeal, the AAC also rejected the claim of the assessee. On second appeal, the Tribunal, however, held that the assessee was entitled to relief even though the said agreement was not approved by the Board. On reference: HELD Section 80-O entitles an assessee to claim tax relief in respect of income by way of royalty, commission, fees or similar payment received by the assessee from a foreign company in…

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