In that case the petitioner entered into two agreements with the foreign companypany for establishing a plant in Indonesia for the manufactured by it.
While the respondent granted approval to the first agreement it denied its approval to the second agreement.
Co. Ltd. vs. S.P. Potnis, Chief Commissioner of Income tax and others 1993 203 ITR 947 Bombay , a Division Bench of the Bombay High Court where one of us was a member held that the order denying approval under Section 80 0 was number justified.
Respondent was of the view that the second agreement did number qualify for approval under Section 80 0 of the Act, since the crux of the management service agreement was that the petitioners would take over responsibility for the working and management of the foreign companypany for a stipulated period and that managerial services did number amount to technical services within the meaning of Section 80 0.
On this the respondent had relied on the decision of the Delhi High Court in J.K. Bombay Ltd.s case.
It is aggrieved by the judgment dated May 29, 1981 of a Division Bench of the Delhi High Court quashing its number approval under Section 80 0 of the Income Tax Act, 1961 for short the Act to an agreement dated November 29, 1969 entered into by the respondent with M s. Soaltee Hotel Pvt.
P. Wadhwa, J. Central Board of Direct Taxes CBDT is in appeal.
The second agreement titled management service agreement provided for the petitioner to take over the responsibility for the working and management of the foreign companypany for a period of twenty five years.
One agreement was titled technical assistance agreement .
For this purpose the petitioner was required to loan to the foreign companypany the services of it fully qualified and experienced managers, engineers, technicians, production specialists and such other personnel as may be necessary number only for the setting up of the Companys said plant but also for the overall working and management of the companypany.
Petitioner was also required to have companytrol over general management of the foreign companypanys business transactions and charge and custody of all the property, books of account, papers, documents and effects belonging to the foreign companypany.
The agreement also companytained wide ranging provisions for the giving of all marketing, industrial, manufacturing, companymercial and scientific knowledge, experience and skill for the efficient working and management of the foreign companypany.
