Technical and engineering services agreement approved under section 80-0; later foreign-project restriction could not apply retrospectively.

An agreement to render technical and engineering services in connection with installation and erection work was treated as qualifying for approval under section 80-0 for assessment year 1982-83 because similar agreements had previously been approved on the same basis. Rejection could not be sustained by invoking section 80HHB, since that provision applied only from assessment year 1983-84 and was not applicable to the year in question. The refusal to approve the agreement on the footing that it involved a foreign project was therefore untenable, and the rejection orders were set aside.

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Issues: Whether the agreement dated 14 May 1981 for rendering technical and engineering services qualified for approval under section 80-0 of the Income-tax Act, 1961 for assessment year 1982-83, and whether rejection could be justified by reference to section 80HHB.

Analysis: The agreement required the assessee to render technical and engineering services in connection with installation and erection work, and similar agreements had earlier been approved under section 80-0. Section 80HHB was introduced only with effect from assessment year 1983-84 and was therefore not applicable to assessment year 1982-83. The refusal to grant approval on the footing that the agreement involved a foreign project under section 80HHB was thus untenable.

Conclusion: The agreement was eligible for approval under section 80-0 for assessment year 1982-83, and the rejection orders were set aside.

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