DECTA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS application under Section 245Q(1) of the Income -tax Act, 1961 ("the Act"), raises a very interesting question for consideration.

(2.) THE applicant, "The Developing Countries Trade Agency", is a company incorporated in the United Kingdom on April 17, 1986. Its name was changed to the shorter form, "DECTA", on October 13, 1993. It is a nonresident company for the purposes of the Act. It had entered into memoranda of understanding with as many as forty -five Indian companies from time to time. Under these agreements, it received various amounts from these companies and the question on which the ruling of the Authority has been sought is in regard to the taxability of these amounts under the Act. The questions posed by the applicant are as follows :

(3.) DECTA was originally established by the British Government's Overseas Development Administration (ODA) in 1973 to assist exporters and export promotion organisations in Third World countries. In 1986, it became an autonomous company limited by guarantee and sponsored by the ODA. In 1991, the control of DECTA was passed from the ODA to the "Crown Agents for Overseas Government and Administrations", a statutory UK corporation with worldwide activities in the field of industrial and economic development, inspection and quality assurance, and economic, financial and technical consultancy services. DECTA is still sponsored by the ODA to provide information and advisory services and undertake research and promotional activities for the benefit of Third World countries. It also specialises in highly focused project activities aimed at developing private -sector commercial and industrial capabilities, oriented towards exports mainly to West Europe and other developed markets.