JUDGMENT [ENTITY], C.J.
1. These are cross-appeals. The assessee (the appellant in [CASE NUMBER]) filed the writ petition. Thereon, it got some relief. Its appeal is filed against the judgment and order of the learned single judge (see [PRECEDENT]) in so far as he refused the balance of the relief that was sought. [CASE NUMBER] is file by the Revenue to impugn the judgment and order to the extent that it gives to the assessee some relief.
2. The assessee is a Government company incorporated under the [ACT]. It manufactures machine tools and has acquired extensive knowledge, experience and technology in that regard. It entered into an agreement with the Federal Military Government of the Federal Republic of Nigeria for the establishment of a machine tools industry in Nigeria on June 29, 1979. The agreement provided that the Nigerian Government and the assessee would collaborate to incorporate a company under the laws of Nigeria. The company would establish a self-contained factory to manufacture and sell the products specified in the agreement. Under [SECTION] of the agreement, the assessee was required to grant to the company the exclusive right to manufacture the products selected by it in Nigeria with the exclusive right to sell the same in Nigeria and certain other African countries. It was required to provide to the company the following services :
(a) Project formulation,
(b) Technical documentation,
(c) Technical assistance for technology transfer,
(d) Training of Nigerian personnel in India and Nigeria,
(e) Erection and commissioning plant, machinery and equipment.
(f) Supply of parts, components, assemblies and raw materials,
(g) Deputation of management and professional engineering personnel, technicians and skilled craftsmen."
3. [SECTION] of the agreement dealt with "technical assistance" and required the assessee to make available to the company its expertise by way of technical information, knowledge and expert advice in relation to the manufacture, assembly, etc., of the products covered by the agreement. [SECTION] of the agreement dealt with "training of company personnel". Clauses 8.1, 8.1.1 and 8.1.2. thereunder, read thus :
"8.1. After signing this agreement, [ENTITY] as technical partner shall evolve detailed training programme for 228 (two hundred and twenty-eight) of the personnel of the company covering a total period of 2,700 (two thousand and seven hundred) man-months at the works of [ENTITY] or any other place in India as may be deemed suitable by [ENTITY] and give them full instructions concerning the manufacturing process of the PRODUCTS.
8.1.1. [ENTITY] as technical partner shall provide training facilities in India to qualified Nigerians in order to meet the estimated manpower requirements.
8.1.2. The terms and conditions for training company personnel in India shall be as specified in Schedule II."
4. Fees and remuneration under the agreement were provided for by [SECTION]. In relation to "Training", [SECTION] provided thus :
"14.9. Training. - In consideration of the services to be rendered by [ENTITY] in training the employees of the company in India under [SECTION], the company shall pay to [ENTITY] a fee at the rate of U. S. $230 (two hundred and thirty U. S. dollars only) per training man-month."
5. [SECTION] dealt with "Royalty" and [SECTION] read thus (see [PRECEDENT] :
"Royalty shall be paid at the rate of 2 (two) per cent. of value added for 7 (seven) years for granting the exclusive rights to the company for use in ECOWAS countries the technical information, know-how, designs, trade mark, logo and to manufacture and sell units of each PRODUCT from the first sale of each PRODUCT."
6. The assessee, on April 2, 1980, wrote to the Central Board of Direct Taxes enclosing an application together with copies of the agreement, seeking the Board's approval thereof for the purposes of deduction under [SECTION] of the [ACT]. On May 1, 1980, the Board wrote to the assessee that it observed that [SECTION] of the agreement provided for grant of the exclusive right to manufacture in Nigeria and the exclusive right to sell the manufactured products in Nigeria and other Economic Community of West African States ("ECOWAS"). This was a trade restriction upon the assessee and the consideration for this restriction was outside the scope of [SECTION] of the Act. The assessee was asked to indicated the portion of the fees which was relatable to this restriction out of the total fee payable under the agreement. On August 4, 1980, the assessee wrote to the Board to say that no portion of the fees or royalty payable to it under the agreement should be attributed to any trade restriction. On September 20, 1980, the Board wrote to the assessee stating that the training of Nigerian personnel in India would mean service rendered in India and the fees receivable in this respect were not entitled to the benefit under [SECTION] The assessee was requested to show cause in this behalf. On October 8, 1980, the assessee did so. On November 24, 1980, the Board conveyed to the assessee its approval of the agreement for the purposes of [SECTION] from the assessment year 1980-81 onwards subject to the disallowance of the amounts receivable under [SECTION] and [SECTION] thereof.
7. A writ petition was filed to impugn the decision of the Board conveyed to the assessee by letter dated November 24, 1980. The learned single judge (see [PRECEDENT]), by the judgment and order under appeal, held that the assessee was entitled to the benefit of [SECTION] of the Act in regard to the royalty paid under [SECTION] but that the fee paid in regard to the training of Nigerian personnel in India was not entitled to such deduction. The learned judge took the view that there was no restriction by reason of the agreement; and that, even assuming that the training of the Nigerian personnel was not a technical service, the imparting to them of scientific knowledge was done in India and, once the skilled personnel went out of India, it was their skill that was used outside India and not the skill of the assessee so the provisions of [SECTION] were not satisfied.
8. The argument on behalf of the Revenue before us is that the agreement creates a trade restriction because, by reason of it, the assessee cannot sell its technology or products to any one other than the company in Nigeria. Assuming that the agreement does create such a trade restriction which we do not accept, we do not find in the provisions of [SECTION] any limitation in this regard nor could counsel for the Revenue indicate it.
9. It is convenient to analyse the relevant portion of [SECTION] It provides for a deduction where the assessee, being an Indian company, includes in its gross total income 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, (a) 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 (b) in consideration of technical services rendered or agreed to be rendered outside India to such Government or enterprise by the assessee.
10. There is, therefore, no exception made where the agreement creates a trade restriction while otherwise satisfying the requirements of [SECTION] Reference was made by counsel on behalf of the Revenue to Circular No. 187 dated December 23, 1975 (see [PRECEDENT]), issued by the Board setting out guidelines for approval of agreements under [SECTION] In our view, the section itself being clear, we cannot take the assistance of this circular in regard to its interpretation. In any event, there is nothing in this circular either which supports the submission on behalf of the Revenue.
11. It was submitted on behalf of the Revenue that the court should not invoke its jurisdiction under [SECTION] of the [ACT] in respect of matters left to the Board by [SECTION] We are afraid that this is not an acceptable submission. High Courts have time and against had to invoke this jurisdiction in regard to the Board's decisions under [SECTION] We note that a similar objection was raised before the Delhi High Court in [PRECEDENT] and the court, after considering the judgments delivered by various High Courts, came to the conclusion that it had the jurisdiction to examine the correctness of the Board under [SECTION]
12. Now, as to the appeal by the assessee. It was contended on behalf of the Revenue that the training of the Nigerian personnel by the assessee was a technical service and, as it was rendered within India, the fees in that behalf were not entitled to deduction under [SECTION] It was contended on behalf of the assessee that the training of the Nigerian personnel in India was not a technical service at all, but the assessee imparted to the Nigerian personnel information concerning industrial knowledge, experience and skill for use outside India. The learned judge, as we have noted, took the view that the Nigerian personnel were trained in India and, once they went out of India, it was their skill that was used outside India and not the skill of the assessee, so that the provisions of [SECTION] did not apply.
13. Our attention was drawn by Sri [ENTITY], learned counsel for the assessee, to the decision of the Delhi High Court in [PRECEDENT]. Therein it was held that the service of managing agent rendered by an Indian company to a foreign company was not a technical service within the meaning of [SECTION] and that the wider definition of technical service rendered by technicians in other provisions of the Act were limited to the construction of those provisions. Reference was also made to the decision of the Bombay High Court in [PRECEDENT]. The assessee there entered into an agreement with a foreign company which imported psyllium husk from India. The assessee was required to carry out certain laboratory tests in India and forward the results thereof to the foreign company. It was held that the service rendered was a technical service but, as it was rendered in India, the assessee was not entitled to the deduction under [SECTION] of the fees received in this behalf.
14. On the other hand, our attention was drawn by counsel for the Revenue to the decision rendered by the Bombay High Court in [PRECEDENT], where the assessee acted as an employment or recruiting bureau for foreign employers and located prospective candidates. It was held that the information that the assessee gave to the foreign employers was not of the nature of industrial, commercial or scientific knowledge, experience or skill within the meaning of [SECTION]
[SECTION]. The real question that arises here is whether the training imparted by the assessee to the Nigerian personnel can be said to be a technical service or is it not more appropriately the act of imparting to the Nigerian personnel information concerning industrial knowledge and skill.
16. In our view, the training of personnel cannot be called a "technical service". A "technical service" can be said to be performed when some work of a technical nature is done by the assessee, as for example, in the Bombay case Searle (India) Ltd. [PRECEDENT] quoted above, of carrying out quality tests of psyllium husk. The imparting of training to the Nigerian personnel by the assessee would seem to us more appropriately to be the imparting to them of information concerning industrial knowledge and skill. The information that is conveyed by the assessee to the Nigerian personnel is so conveyed for use in Nigeria in the manufacture and sale of products under the agreement. In our view, therefore, the provisions of [SECTION] in this behalf are complied with.
17. In the result, the appeal by the Revenue ([CASE NUMBER]) fails and is dismissed. The appeal by the assessee ([CASE NUMBER]) succeeds. The judgment and order under appeal, in so far as it holds that the Board was right in refusing to grant approval for the deduction under [SECTION] of the fees received by the assessee under the agreement for the training of Nigerian personnel in India, is set aside. Consequently, the petition is made absolute as prayed.
18. Orders on the appeals accordingly. No orders as to costs.