Lurgi India Co. P. Ltd. vs Central Board Of Direct Taxes And ...
1979 Latest Caselaw 35 Del

JUDGMENT

V.S. Deshpande, C.J.

1. The agreements, both dated 22nd May, 1972, between the petitioner, which is an Indian company, and Godrej Soaps Private Ltd., being another Indian company, were sent for approval by the petitioner to respondent No. 1 under Section 80MM of the I.T. Act. The approval was refused on the ground that the technical know-how passed on by the petitioner to Godrej as also technical services rendered by the petitioner to Godrej were, in fact, done by a foreign company through the petitioner. -The petitioner has stated in the petition that it had entered beforehand into an agreement with a foreign company and indeed the very incorporation of the petitioner-company was for the purpose of obtaining consultation and technical know-how from the said foreign company. The question, therefore, is whether the approval to these agreements could be denied on the ground that the Indian company had by a previous agreement with a foreign company obtained technical consultation as also technical know-how from the foreign company.

2. On a perusal of Section 80MM we do not find that the Indian company which claims the benefit of Section 80MM is prohibited from obtaining technical know-how and processes from a foreign company. The agreements which are to be approved under Section 80MM are between Indian companies. The services to be rendered are technical services rendered by the petitioner-company and the technical know-how is also by the petitioner Indian company to Godrej. All the requirements, therefore, satisfy Section 80MM. The reasons given for refusal to approve the agreements are irrelevant to Section 80MM. The order refusing the approval is, therefore, quashed and the Board is directed to re-consider the application of the petitioner for approval. The writ petition is allowed in the above terms with no order as to costs.