1. The petitioner - M/s. Eastman Consultants - is a private limited company (hereinafter 'the assessee'). During the relevant previous year ending September 30, 1978 (assessment year 1979-80), the assessee entered in the course of its business, into as many as nineteen agreements, mostly in the form of letters, with different parties of different places such as Tehran-Iran, Saudi Arabia, Bahrain and Dubai (UAE). In pursuance thereof, the assessee submitted to the CBDT, application forms for approval of the said agreements under s. 80-O of the I.T. Act (hereinafter 'the Act'). The Board having refused to accord such approval, the petitioner has approached this court under art. 226 of the Constitution.
2. Going through the petition as also the letters-cum-agreements and the approval applications and hearing Mr. V. H. Patil, the learned advocate for the petitioner, and Mr. R. J. Joshi, the learned advocate for the respondents, I find myself unable to take any different view of the matter that the one taken by the Board in nor approving the agreements in question.
3. The assessee has been acting, in substance, as a mere employment or recruiting bureau. All that it does is to locate prospective candidates or employees and collect their bio-data or particulars. The very approval applications state that the assessee is not providing technical know-how but is claiming exemption under 'information' which is imparted by means of 'conveying the names' of suitable candidates by truck call, telex or post. This process of information can, by no stretch, be said to partake of the nature of '.... industrial, commercial or scientific knowledge, experience or skill' within the meaning of s. 80-O of the Act. These words have to be construed in their context as also considering the substance of the matter rather than its form. Attempt to mechanically use the words of s. 80-O the Act to camouflage the true nature of one's work cannot be encouraged.
4. Even the second condition is not fulfilled, the same being that industrial, commercial or scientific knowledge, experience or skill must be made available for 'use outside India'. Under the very agreements mostly in the form of cryptic letters, the emerging position is that the assessee collects information, particulars and/or bio-data and on that basis locates in India prospective candidates or employees. Thereafter, selection is also made in India itself and that too, in most cases, by the assessee itself and, at times, by a representative of the foreign employer coming to India for that purpose. In several letters-cum-agreements the foreign employers have asked and/or authorised the assessee to itself select and recruit candidates in India and in some cases the assessee is asked to keep candidates ready for interview in India by a representative of the foreign employer. The entire service rendered by the assessee is thus in India and no part thereof extends outside the country. It is, in this context, relevant to note that the approval applications themselves emphasise the aspect (vide column five) that the fees, which are charged, are primarily for locating and providing information for which the assessee claims to itself have a vast staff which locates the required category of personnel and then processes their applications to see whether they are technically fit for the job. All this is done, undertaken and performed in India. The work of the assessee thus commences and stands completed in India itself. The fact that the selected candidate goes abroad and works outside India is altogether beside the point. That work has nothing to do with the assessee's work within India. In such circumstances, to nevertheless accord approval as claimed would result in permitting evasion under the cover of deductions.
5. Section 80-O of the Act provides for concessional tax treatment. Tax incentive contemplated thereunder is basically for encouraging India companies to export their know-how and skill abroad. Mere supply of particulars or bio-data of various Indians willing to work abroad and their selection or recruitment accordingly in India is a situation falling for too short of the requisites necessary for attracting the benefits of this section. Widely worded though it is, the section does not cover a case as the present one. The contentions raised on behalf of the assessee are de hors the actual facts reflected in the agreements and constitute a strained effort to gravitate or bring the matter within the four corners of the said section. Acceptance thereof would militate against the object and purpose behind the law in question. A judicial interpretation should be so geared as to fairly serve the legislative intent. The impugned order of the Board is correct and legal. It suffers from no infirmity.
6. This petition, therefore, fails and is rejected.