TMI Blog1990 (9) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... t venture company was to be of 3,125 paid up equity shares of Saudi Riyals 1000 each, out of which the petitioner was to hold 781 shares. The rest of the shares were to be held by the said concern. Thereafter, the petitioner entered into an agreement with the joint venture company. In terms of the latter agreement, the petitioner was to make available to the joint venture company the technical know-how and technical services to enable the joint venture company to set up a galvanizing project in Saudi Arabia. In consideration of making available the technical know-how, technical information, drawings, designs and also recommending appropriate production process and appropriate plant, machinery and equipment, etc., the joint venture company was to pay to the petitioner-company fees amounting to Saudi Riyals 6,25,000 which amount was to be adjusted against the purchase of shares by the petitioner in the joint venture company. Permission of the Reserve Bank of India to set up a joint venture company in Saudi Arabia was obtained on 15th/17th March, 1982. That was subject to the conditions laid down by the Ministry of Commerce, Government of India, in its letter dated February 8, 1982. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce. The decision of the Board under section 80-O, on the other hand, was not appealable and could be challenged only under article 226 of the Constitution of India before this court. The jurisdiction of this court under article 226 was limited. By considering the provisions of section 80HHB about which the Board was not competent, the Board, he argued, was depriving the assessee of its legitimate rights to challenge the decision under section 80HHB against the assessee by way of appeal, etc. Mrs. Singh, learned counsel for the Department, on the other hand, stated that the provisions of sub-section (5) were overriding provisions and, therefore, while considering the question of approval of an agreement under section 80-O, the Board was obliged to take into account the overriding provisions of sub-section (5) of section 80HHB. That is what the Board has done. In my view, the Board has a statutory duty to approve an agreement under section 80-O provided the conditions laid down in that section are satisfied. The Board's order under that section is final in the sense that the Income-tax Act does not provide for any appeal or revision against such an order. That is why the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable to the assessee for the execution of a foreign project referred to in clause (a) of sub-section (1) or of any work referred to in clause (b) of that sub-section shall qualify for deduction for any assessment year under any such other provision." "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 services rendered or agreed to be rendered outside India to such Government or enterprise by the assessee, under an agreement approved by the Board in this behalf, and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the profits derived by them from foreign contracts. For this purpose, it is proposed to insert a new section 80HHB in the Income-tax Act to provide that where an Indian company or a non-corporate taxpayer resident in India derives any profits and gains from the business of execution of a project under a contract entered into by him with the Government of a foreign State or any statutory or other public authority or agency in a foreign State or with a foreign enterprise, he will be entitled to a deduction, in the computation of his taxable income, of 25 per cent. of such profits and gains, subject to certain conditions. This concession will also be available where the assessee undertakes the execution of any work in connection with any foreign project undertaken by any other person." From the Notes on Clauses and the Memo explaining the provisions, it is evident that the provisions of section 80HHB were inserted with a view to encourage certain persons to undertake construction and engineering contracts outside India. Contractors falling under section 80HHB were, perhaps, not entitled to any relief before the introduction of section 80HHB. The provision was introduced to give re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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