Section 80-0 approval does not require direct privity, and foreign exchange received through an agent can satisfy the statutory condition.

Section 80-0 approval is not defeated merely because the assessee was not a direct party to the foreign contract, where the approved arrangement identifies the services and personnel, and the foreign enterprise has accepted the assessee's participation. The note also states that receipt of convertible foreign exchange through an Indian intermediary satisfies the statutory condition when the intermediary acts as the assessee's agent and holds the balance for remittance to the assessee. On that reasoning, absence of direct contractual privity does not bar approval, and foreign-exchange receipts routed through an agent remain eligible for the benefit.

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Issues: (i) whether approval under section 80-0 of the Income-tax Act, 1961 could be refused on the ground that the assessee was not a party to the foreign contract; and (ii) whether the receipts routed through an Indian intermediary failed to satisfy the requirement of receipt in or bringing into India of convertible foreign exchange on behalf of the assessee.

Issue (i): whether approval under section 80-0 of the Income-tax Act, 1961 could be refused on the ground that the assessee was not a party to the foreign contract.

Analysis: Section 80-0 requires that the assessee should have rendered technical services under an agreement approved by the Board and that the income should be received in consideration of those services. The provision does not expressly require that the agreement must be directly between the assessee and the foreign enterprise. Where the agreement identifies the personnel and the services to be rendered, and the foreign enterprise has accepted and approved the assessee's participation, the absence of direct contractual privity does not defeat the claim. The contrast with section 80MM, which expressly insists on an agreement with the other contracting party, supports this reading.

Conclusion: The objection based on absence of privity of contract was not sustainable, and approval could not be refused on that ground.

Issue (ii): whether the receipts routed through an Indian intermediary failed to satisfy the requirement of receipt in or bringing into India of convertible foreign exchange on behalf of the assessee.

Analysis: The arrangement showed that the intermediary retained only its agreed share and held the balance for the assessee, functioning as the assessee's agent for collection. The foreign currency received abroad on behalf of the assessee was later brought into India, and the fact that it was initially remitted through the intermediary did not alter its character. Receipt through an agent is receipt on behalf of the assessee, and the statutory condition is met when convertible foreign exchange is brought into India in that manner.

Conclusion: The foreign-exchange receipt requirement was satisfied in the assessee's favour.

Final Conclusion: The agreement qualified for approval under section 80-0, and the assessee was entitled to the consequential relief.

Ratio Decidendi: For section 80-0, direct contractual privity between the assessee and the foreign enterprise is not indispensable if technical services are rendered under an approved agreement and the income is received in convertible foreign exchange, including through an agent on behalf of the assessee.

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