TMI Blog1985 (10) TMI 7X X X X Extracts X X X X X X X X Extracts X X X X ..... In or about October, 1974, the Rangoon City Development Committee requested WAPCOS to provide consultancy services for the Rangoon City Municipal Water Supply Project. WAPCOS were required to supervise, inter alia, production of prestressed concrete pipes, laying of prestressed concrete transmission mains and specials from Pugyi reservoir to Rangoon and construction and supervision of prestressed concrete pipe plant. WAPCOS in turn requested the petitioner to collaborate with WAPCOS. The petitioner agreed to make its technical expertise available for the said work. By its letter dated December 17, 1974, the petitioner agreed to supply its expertise for the various jobs set out in that letter. The petitioner also mentioned that its experts would be backed by the designs and development organisation of the petitioner in discharging their duties efficiently ; it would also provide facilities for training the engineering staff of the Rangoon City Municipal Committee, if so required, at its works in India. The petitioner agreed to limit its role to that of consulting engineers. Thereafter, the work of providing consultancy services to the Rangoon City Municipal Committee at Rangoon, B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clear from the letter dated March 31, 1980, which the petitioner has obtained from the Rangoon City Development Committee. The letter of Rangoon City Development Committee confirms that since inception, it was aware of the petitioner's association with WAPCOS in rendering consultancy services at Rangoon for its project, because these facts were clearly revealed in the global tender submitted by WAPCOS for this project. The petitioner's participation was recognised and approved before the contract was awarded to WAPCOS. What is important, the letter says: ........ your share of fees for rendering consultancy services to us was remitted by us to you along with WAPCOS share of fees through the good offices of WAPCOS as your agent in our foreign exchange. " Subsequently, after WAPCOS obtained the permission of the Reserve Bank of India, the petitioner, as from December, 1978 onwards, is receiving payment directly in foreign currency, namely, US dollars, from WAPCOS in respect of the services rendered by it under the said contract. The petitioner, by its letter dated September 26, 1977, made an application to the Central Board of Direct Taxes for approval of the agreement dated Februa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome should be by way of fees or any similar payment, (ii) it should be received by the assessee from a foreign enterprise, (iii) it should be in consideration of technical services rendered or agreed to be rendered outside India to such foreign enterprise by the assessee, (iv) such technical services should be rendered by the assessee under an agreement approved by the Board in this behalf, and (v) such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee. In the present case, the income received by the petitioner is by way of fees. These fees are in consideration of technical services rendered outside India by the petitioner to a foreign enterprise, namely, the Rangoon City Development Committee. The fees have been paid by the Rangoon City Development Committee in US dollars, which have been brought into India. The fees are for services rendered under the agreement dated February 5, 1976. The question is whether the agreement dated February 5, 1976, between WAPCOS and the Rang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 80MM of the Income-tax Act, 1961, which has since been repealed with effect from April 1, 1984. Under section 80MM " the gross total total income of an assessee, being an Indian company, includes any income by way of royalty, commission, fees or any other payment ... received by the assessee from any person carrying on a business in India in consideration ......... under an agreement entered into by the assessee with such person on or after the 1st day of April, 1969, and approved by the Board in this behalf, there shall......... be allowed a deduction from such income of an amount equal to forty per cent. thereof......... The language of section 80MM shows that where an agreement is required to be between an assessee and a third party, the section in terms prescribes this requirement. Any such express requirement that the agreement should be between the assessee and the foreign party is absent from section 80-0. Therefore, under section 80-0, it is not necessary that the agreement referred to therein should be between the assessee and the foreign party. All that is required is that the assessee should have rendered, inter alia, technical services under an agreement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome, therefore, which is derived by the petitioner under the contract dated February 5, 1976, is an income received in convertible foreign exchange outside Indi and brought into India on behalf of the assessee in accordance with the law in force. In this connection, my attention was drawn to a decision of my brother Pratap J., dated June 10, 1985, in Gannon Dunkerley Co. Ltd. v. Central Board of Direct Taxes, New Delhi, in Writ Petition No. 1044 of 1981 [1986] 159 ITR 162 (Bom). In that case, Gannon Dunkerley Co. Ltd. had acted as sub-contractors of Engineering Projects (India) Ltd. in respect of a contract entered into by Engineering Projects (India) Ltd. with the Government of Kuwait. There was an agreement between Gannon Dunkerley Co. Ltd. and Engineering Projects (India) Ltd., under which Gannon Dunkerley Co. Ltd. had worked in Kuwait. The application of Gannon Dunkerley Co. Ltd. for approval of this agreement with Engineering Projects (India) Ltd. under section 80-0 of the Income-tax Act was rejected by the Board on the ground that the agreement was with an Indian company and hence it did not qualify for approval under section 80-0. This contention of the Board w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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