Section 80-0 deduction depends on foreign-source consideration; payment by an Indian company did not satisfy the statutory requirement.

Deduction under section 80-0 was not available where the agreement was with an Indian company and the contract price was payable by that company, even though the services were intended for a foreign project and payment was received in foreign currency. The court noted that section 80-0 does not require the agreement itself to be with a foreign Government or foreign enterprise; however, the statutory condition is that the relevant patent, know-how, design, invention or services must be made available to a foreign Government or foreign enterprise and the consideration must come from such foreign source. Because no payment was received from a foreign Government or foreign enterprise, the deduction claim failed.

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Issues: Whether deduction under section 80-0 of the Income-tax Act, 1961 was available where the agreement was with an Indian company, but the services were to be used in a foreign project and payment was received in foreign currency.

Analysis: Section 80-0 does not require the agreement itself to be with a foreign Government or foreign enterprise. The material requirement is that the assessee must make available the relevant patent, invention, design, know-how, or services to a foreign Government or foreign enterprise, and the consideration must be received from a foreign Government or foreign enterprise. On the agreement in question, the contract price was payable by the Indian company, and there was no payment from any foreign Government or foreign enterprise. That statutory condition was therefore not satisfied.

Conclusion: Deduction under section 80-0 was not allowable, and the challenge to the rejection of the application failed.

Ratio Decidendi: For deduction under section 80-0, the source of consideration must be a foreign Government or foreign enterprise; payment by an Indian company does not satisfy the statutory requirement.

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