Delhi High Court
E.P.W. Da Costa And Anr. vs Union Of India (Uoi) (Through Cbdt) on 14 February, 1979
Equivalent citations: [1980]121ITR751(DELHI)
JUDGMENT Deshpande, C.J.
1. In these three writ petitions we are concerned with construing the applicability of Section 80-O of the Income-tax Act (the Act) to three agreements entered into by the petitioner, who is the director of the Indian Institute of Public Opinion Private Ltd. The respondent, Central Board of Direct Taxes, Foreign Tax Division, has declined to approve the said agreements. In these petitions it is contended that these agreements fulfill the requirements of Section 80-O and the orders rejecting the applications for the approval of the agreements are sought to be quashed. The gist of the agreements may be stated as below : 1. Civil Writ No. 767 of 1975
2. It is an agreement between the petitioner and the British Broadcasting Corporation (BBC). It is as follows :
" Whereas the consultants are engaged in conducting specialised economic and public opinion research on all India basis to assess the attitudes of a wide range of political, social and economic subjects and that the ' principals ' are desirous of availing services of the consultants and their technical know-how on survey sampling/interviewing/coding tabulation and analysis for use in their country.
Now this agreement witnesseth as follows :
1. That the consultants shall undertake an audience research study in the Hindi speaking areas in States of Indian Union as proposed by the principals to assess the radio listening habits of the people.
2. That the consultants shall use their technical knowledge to advise on questionnaire in the proposed audience research and on analysis of the findings which will be finally used in the audience research organisation of the British Broadcasting Corporation as and when required."
3. Approval to this agreement was refused by the respondent. The reasons for the refusal are given in their letter dated 12th December, 1975, as follows, namely : (1) the services rendered in making an " audience research study in the Hindi speaking areas of the Union of India " to assess the radio listening habits of the Indians, were rendered in India ; and (2) the information supplied to the foreign party was not of the type contemplated by Section 80-O of the I.T. Act, 1961.
4. Apparently, the respondent thought that the services rendered were not technical services which have to be rendered outside India and the audience research study made by the petitioner was not the information supplied to the foreign party of the type contemplated by Section 80-O.
5. The relevant part of Section 80-O is as follows :
"(1) Where the gross total income of an assessed, being an Indian company, includes any income by way of royalty, commission, fees or any similar payment received by the assessed from the Government of a foreign State or a foreign enterprise 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 assessed, or in consideration of technical services rendered or agreed to be rendered outside India to such Government or enterprise by the assessed, under an agreement approved by the Board in this behalf, 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 assessed 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 the whole of the income so received in, of brought into, India in computing the total income of the assessed,"
6. The question for consideration is whether the petitioner has received payment from the BBC in consideration for the use outside India of information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided or agreed to be made available to the BBC. The BBC is a commercial corporation interested in knowing how the BBC broadcasts are received by the listeners in India. For that purpose they engaged the petitioner to conduct a public opinion survey. The petitioner has stated in his rejoinder that the information supplied by the petitioner is used by the BBC in its audience research organisation and, inter alia, helps the said organisation in planning its programme. Apparently the BBC would make modifications in its programmes after knowing from the information supplied by the petitioner as to how its broadcasts are received in India.
7. The requirements of Section 80-O to be fulfillled by the petitioner to qualify for deduction in respect of payment received by the petitioner from the BBC may now be considered :
(1) The receipt has to be in consideration for the supply of information. This is not disputed.
(2) The information is to be supplied for use outside India. Mr. Kirpal contends that the word " use " means some practical use to be made by the foreign party of the information supplied by the Indian company. The word " use " is a very general word. The BBC can be said to use the information received from the petitioner when it formulates or modifies its broadcasting programmes to India according to the guidance given to the BBC by the said information. It is not necessary that the use to which the information is to be put must be more practical, that is to say, it must result in the manufacturing or making of some concrete thing.
(3) The information must concern industrial, commercial or scientific knowledge, experience or skill.
8. The petitioner issues questionnaire to the listeners and the information gathered from the answers to the questionnaire is compiled in the form of various statistical tables. According to Webster's New International Dictionary, Vol. III, statistics is a science dealing with the collection, analysis, interpretation and presentation of masses of numerical data and that it is a branch of mathematics. It would appear, therefore, that the statistical tables compiled by the petitioner after analysing masses of numerical data are commercial or scientific knowledge which is made available to the BBC. For, the word " science " is also a very general word. Since statistics is a science according to Webster's, even in a more particular sense, the statistical information may be said to be scientific knowledge within the meaning of Section 80-O. The expression " information concerning industrial, commercial or scientific knowledge, experience or skill " is not a very happy one. If we understand that information is something communicated and that the contents of the information concerned scientific knowledge, then the knowledge gathered and analysed by the petitioner from the Indian listeners and communicated to the BBC may be said to be information concerning commercial or scientific knowledge. Perhaps such information is itself commercial or scientific knowledge and it is not a very elegant way to say that it is information concerning commercial or scientific knowledge. If commercial or scientific knowledge is confined to mean the abstract exposition of commercial or scientific theories then only a book on commercial or scientific subject may be regarded as scientific knowledge. But knowledge may be general or particular. Such knowledge as was compiled, classified and made useful for the use of the BBC may also be said to be commercial or scientific knowledge. BBC is a commercial corporation. Its function may be to disseminate information, but in the discharge of this function it requires commercial or scientific knowledge as to the way its broadcasts are received in different countries. Such a highly organized concern as BBC would not be content with the general information as to the receipt of its broadcast in India. The information would have to be specific, particular and analysed according to the languages in which the broadcasts are made and according to the classes of the public who listen to such broadcasts. In view of the trend to give a wider meaning to the words " science and scientific knowledge ", it would not be possible to restrict the connotation of these words too narrowly. In our view they would include the statistical tables compiled by the petitioner for the use of the BBC inasmuch as statistics itself has been recognised as a science.
9. Mr. Kirpal further contends that the information communicated by the petitioner to the BBC is only data and not scientific or commercial knowledge. Perhaps data may be distinguished from knowledge inasmuch as data may be mere masses of information which is not properly analysed and made intelligible, while knowledge is analysed and presented for understanding. The information supplied by the petitioner to the BBC must fall in the second category or else the BBC would not have entered into an agreement with the petitioner for the supply of the information. A mere mass of information without analysis and without being understandable would not be of use to the BBC. The information is not, therefore, mere data but scientific knowledge.
10. Rendering of technical services question does not arise in the present case as the services have been rendered in India. The petitioner was entitled to the benefit of Section 80-O for the above reasons. The order dated 2nd April, 1975, at page 116 of the paper book refusing the approval of the Board to the petitioner is, therefore, quashed and the petitioner is declared to be entitled to the benefit of Section 80-O. The petition is allowed in the above terms with no order as to costs.
11. Civil Writ No. 768 of 197512. The agreement in this case is at page 115 of the paper book, annex. " III-B ", and is identical to the one referred to above. The petitioner is, therefore, entitled to the benefit of Section 80-O in respect of this agreement also. The order by the respondent, dated 2nd April, 1975, regretting their inability to accord approval to the said agreement dated 30th September, 1972, is quashed. The petitioner is declared to be eligible to the benefit of Section 80-O for the reasons given in the order disposing of the foregoing writ petition. This writ petition is allowed in the above terms with no order as to costs, 13. Civil Writ No. 769/75
14. This agreement at page 112 of the paper book, being annex. " III-B ", is between Nippon Research Centre Ltd. of Japan and the petitioner. The material portion of it is reproduced below :
" Whereas the consultants are engaged in conducting specialised economic and public opinion research on all India basis to assess the attitude of a wide range of political, social and economic subjects and that the ' principals ' are desirous of availing the services of the consultants and their technical know-how on surveys sampling/interviewing/coding tabulations and analysis for use in their company.
Now this agreement witnesseth as follows :
1. That the consultants shall undertake and design a scientific probability sample in all States of the Indian Union except Assam and Jammu & Kashmir to reflect the adult literates between the ages of 18 and 24 ; it shall moreover cover urban and rural universes in equal samples of 1000 each and shall present mutually agreed questionnaires in all Indian languages in use. Thereafter on an appointed date it shall conduct interviews in all the States in the appropriate languages and prepare a design for transmitting the results on IBM data cards capable of computer tabulations in a design comparable with similar elements in eleven participating countries. "
15. The Nippon Research Centre Ltd. collects information from various countries on questions which are referred to in the letter of the petitioner to the Board dated 18th July, 1974. Apparently, it does so for its clients or those who may buy the said information from it. This information also is obtained after an exercise in statistical analysis. The nature of this agreement cannot, therefore, be distinguished from the two agreements of the petitioner with the BBC considered above. For the reasons given above, therefore, the petitioner is. entitled to the benefit of Section 80-O in respect of this agreement also. The order dated 1st April, 1975, by the Board refusing approval to this agreement is also quashed. This writ petition is also allowed in the above terms with no order as to costs.