Judgment

SABYASACHI MUKHARJI, J. :- Special leave granted.

2. This is an appeal from the judgment and order of the Division Bench of the High Court of Bombay whereby the Division Bench concurred with the judgment and order of the learned Single Judge of the Court. The respondent herein had entered into an agreement on or about 5th May, 1978 with Thai Rayon Company Limited at Thailand (hereinafter called the foreign company). It was engaged in the business of manufacturing and selling Stapple Fibres at Bangkok in Thailand. The agreement recited that the respondent as he was described was a technician holding a Bachelors degree from the Massachusetts Institute of Technology, U.S.A. and has had several years of experience in the business of manufacturing and selling Staple Fibre through his association with companies engaged in similar business and the foreign Company as referred to in the agreement aforesaid as the employer had approached him, i.e the technician to make available to the employer his services in Bangkok on certain terms and conditions, inter alia, that the Thai Company would pay to the respondent remuneration of 12,000 per annum in quarterly instalments and it would be receivable at Bangkok. The agreement was for a period of three years with liberty to either party to terminate it after six months notice. It was subject to the approval of the Governments of Thailand and India and other authorities, if any.

3. The respondent applied to the Central Government in India for its approval of his employment with the Thai Company under the agreement for the purpose of securing the benefit conferred by section 80RRA of the Income-tax Act, 1961 (hereinafter called the Act). On June 8, 1979 the Government informed the respondent that it was unable to approve the employment with the Thai Rayon Company Limited, Bangkok, as per the terms and conditions contained in the agreement dated 5th May, 1978 for the purpose of section 80RRA of the Act as the section, according to Government contemplated rendering of service outside India in the status of an employee. It was further stated that it was seen that the status of the respondent under the foreign employer was that of a consultant and not of an employee. Therefore, the remuneration contemplated under section 80RRA was from an employer and would not be applicable to the instant case of the respondent, according to the Government.

4. Thereafter it appears, after hearing the respondent, the Government by its letter dated 17th February, 1981 observed that the benefit of section 80RRA of the Act could not be given to the respondent for the reason stated in that letter.

5. Was the Government right in the view it took? is the question here.

6. The learned Single Judge of the High Court quashed the communication refusing to accord approval and directed the Government to reconsider the application of the respondent.

7. There was a Letters Patent appeal before the Division Bench of the High Court. The Division Bench found no reason to interfere with the view expressed by the learned Single Judge and accordingly the appeal was dismissed. Aggrieved thereby the appellant who was the respondent before the trial court has come up to this Court.

8. We are concerned in this appeal with the construction of section 8ORRA of the Act. The said section is as follows :

"80RRA. (1) Where the gross total income of an individual who is a citizen of India includes any remuneration received by him in foreign currency from any employer (being a foreign employer or an Indian concern) for any service rendered by him outside India, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the individual, a deduction from such remuneration of an amount equal to fifty percent thereof :

Provided that where the individual renders continuous service outside India under or for such employer for a period exceeding thirty-six months, no deduction under this sect