- 1 - IN THE HIGH COURT OF JUDICATURE AT BOMBAY O.O.C.J. WRIT PETITION NO.1254 OF 1993 ... Marg Marketing & Research Group Pvt.Ltd. ...Petitioner v/s. V.P.Verma & ors. ...Respondents ... Mr.Toor i/b Crowford Bayley for the Petitioner. None for the Respondents. ... CORAM: D.K.DESHMUKH & J.P.DEVADHAR, JJ. DATED: 21ST OCTOBER, 2008 - 2 - P.C.: 1. By this petition the Petitioner challenges the order issued by Respondent No.1 denying benefits under Section 80-O in respect of information concerning Industrial Commercial or Scientific knowledge or experience or skill made available to various foreign enterprises outside India. The order is dated 7th July, 1992. 2. In the petition the Petitioner claims that the Petitioner is a leading organisation in the field of market research consultancy and has long standing experience and expertise in rendering technical services in these areas. The Petitioner has developed in-house expertise in providing research services in India and abroad and based on the experience and expertise developed over a number of years, the Petitioner has been rendering technical services in the field of market research. The Petitioner is engaged, inter alia, in conducting specialised market economic and public opinion research surveys to assess the attitudes of the people on a wide range of subject. The Petitioner - 3 - has a large Organisation with staff specially equipped to carry out market research surveys and has a wide spectrum research organisation offering a variety of market research services and has acquired considerable know-how, information, data and experience in modern techniques of market research and data processing and analysis of research findings. 3. According to the Petitioner, the Petitioner had entered into agreement with eight foreign enterprises for conducting market survey for them. The Petitioner made application under Section 80-0 of the Act seeking approval of these eight agreement with the foreign enterprises. Those applications were scrutinised by the Respondents, certain queries were made, to which answers were submitted by the Petitioner. Ultimately, the Chief Commissioner of Income-tax by order dated 7th July, 1992 declined to approve eight agreements in relation to which the applications were made and thus the applications were rejected. 4. The present petition is directed against that order. The learned Counsel appearing for the Petitioner submitted that the survey was conducted in - 4 - India. The information collected as a result of the survey was submitted to the foreign parties in order to enable them to decide whether they should start their operations in India. A decision to start their operations in India or not to start their operations in India was to be taken by those foreign enterprises on the basis of information made available to them by the Petitioner as a result of survey and therefore, the information was to be used by the foreign parties outside India. 5. The learned Counsel relied on the Circular issued by the Government of India No.700 dated 23rd March, 1995. He also relied on two judgments of the Delhi High Court, one in the case of Commissioner of Income-tax v/s. Inchcape India P.Ltd. 92 ITR 273 and other in the case of Commissioner of Income-tax v/s. Eicher Consultancy Services Ltd., 214 CTR (Del) 126. Both the judgments relied on the circular dated 23rd March, 1995 for recording a finding in favour of the Appellant before the Delhi High Court. 6. None appeared for the Respondents, though they are served. 7. The provisions of Section 80-0 of the Income-tax - 5 - Act, which are relevant read as under:- 80-0 Where the gross total income of an assessee, being (an India 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 enterprises 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 in this behalf by the Chief Commissioner or the Director General) (and 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 accordance with any law for the time being in force for regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction of an amount equal to fifty per cent of the income so received in, or brought into, India, in computing the total income of the assessee) Provided that the application for the approval of the agreement referred to in this section is made to the Chief Commissioner or, as the case may be, the Director General in the prescribed form and verified in the prescribed manner before the 1st day of October of the assessment year in relation to which the approval is first sought; Provided further that the approval of the - 6 - Chief Commissioner or, as the case may be, the Director General shall not be necessary in the case of any such agreement which has been approved for the purposes of the deduction under this section by the Central Government before the 1st day of April, 1972, or by the Board before the 1st day of April, 1989, and every application for such approval of any such agreement pending with the Board immediately before the 1st day of April, 1989 shall stand transferred to the Chief Commissioner or the Director General for disposal. Provided also that such income is received in India within a period of six months from the end of the previous year, or where the Chief Commissioner or Commissioner is satisfied (for reasons to be recorded in writing) that the assessee is, for reasons beyond his control, unable to do so within the said period of six months, within such further period as the Chief Commissioner or Commissioner may allow in this behalf. Explanation: for the purpose of this section,- (i) "convertible foreign exchange" means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the law for the time being in force for regulating payments and dealings in foreign exchange; (ii) "foreign enterprises" means a person who is a non-resident." It is clear from the provisions of Section 80-0 that where the use of the information supplied by the Petitioner is outside India, then, the income earned qualifies for deduction under Section 80-0. On the other hand, if the information is used in India, then the income does not qualify for deduction under - 7 - Section 80-0. Perusal of the order impugned in the petition shows that the Chief Commissioner has declined to grant approval mainly on the ground that the survey was commissioned by the foreign parties because they intended to use the Indian market and considering the point on which the information was to be collected in the survey would show that that information will enable the parties to enter the Indian market. According to the Chief Commissioner, therefore, as the information supplied by the Petitioner was to be used by the foreign parties in India for conducting their business in India, the agreements do not deserve to be approved under Section 80-0. The only submission of the Petitioner is that in view of the Circular dated 23rd March, 1995 the order of the Chief Commissioner is liable to be set aside. The order of the Chief Commissioner impugned herein cannot be set aside on the ground that it does not comply with the contents of the Circular dated 23rd March, 1995, because the said order was passed on 7th July, 1992, whereas the Circular was issued on 23rd March, 1995. 8. The learned Counsel appearing for the Petitioner has also relied on the judgment of the Supreme Court in the case of Union of India and anr. v/s. Azadi - 8 - Bachao Andolan and anr, 706 ITR (vol 263) to claim that the Circular is binding on the department and the officers of the department. But as observed above, the Circular in question was not even issued when the order impugned in the petition was made and therefore, there is no question of that Circular being binding on the Chief Commissioner who made the order on 7th July, 1992. Perusal of provisions of Section 80-0 shows that it vests power in the Chief Commissioner to approve the agreement which complies with the provisions of Section 80-0. The section, therefore, vests quasi-judicial power in the Chief Commissioner to decide the agreements produced before him deserve to be approved or not in terms of provisions of Section 80-0, and therefore, the Circular relied on by the Petitioner will not bind the Chief Commissioner who is the quasi-judicial officer in terms of the law laid down by the Supreme Court in the case of Azadi Bachao Andolan (supra). In our opinion, the validity of the order impugned in the petition has to be judged on the basis of material placed by the Petitioner before the Chief Commissioner. Perusal of the order of the Chief Commissioner shows that the Chief Commissioner has given elaborate reasons why he finds that the agreement cannot be approved, because the information - 9 - supplied by the Petitioner to the foreign parties is to be used by the foreign parties in conducting their business in India. It is to be noted here that while conducting survey the Petitioner was to find out the purchase habits of the Indian in relation to the product, the type of outlet from where the products are sold, the area in which it is sold and income group of the persons who purchased it. It is obvious that this information was called by the foreign parties to enable them to choose the location and their outlet in India to decide the price of their products in India, and therefore, we find that the conclusion that is reached by the Chief Commissioner on the basis of the material produced before him is a possible conclusion to be reached. We cannot term the conclusion or the reasons given by the Chief Commissioner as perverse or impossible, and therefore, in our opinion, considering the jurisdiction of this court under Article 226 of the Constitution of India it will not be in the interest of justice to interfere with the order impugned in the petition. 9. In the result, therefore, petition fails and is dismissed. Rule discharged. No order as to costs. - 10 - (D.K.DESHMUKH, J.) (J.P.DEVADHAR, J.)