S. RAJENDRA BABU, J.

( 1 ) THE petitioner entered into an agreement with the Federal Military Government of the Federal Republic of Nigeria and applied for grant of approval and deductions as contemplated u/s 80-0 of the income-tax Act, 1961 (hereinafter referred to as the Act) to the 1st respondent. The agreement consisted of various types of passing of technical information, knowhow, designs, trade mark, logo and also training of Nigerian personnel in India among other matters. Article 15,1 of the agreement speaks about the payment of royalty which is at the rate of 2 percent of value added for seven years in respect of the right granted to the Nigerian Government for exclusive use in that country and other ECOWAS (Economic Community of west African States) countries as provided in Articles 4. 1 and 4. 1. 1. The first respondent took the view that the same is a trade restriction on the petitioner and the consideration in respect of that restriction is outside the scope of Section 80-0 of the act and, therefore, declined to grant approval so as to entitle them for deduction u/s 80-0 of the Act. On the question of training Nigerian personnel in India as provided in Article 4. 1 read with (d) of article 4. 1. 2 of the agreement and a technical fee paid thereof under Art. 14 9, the 1st respondent stated that the training of Nigerian personnel in India would mean a service rendered in India and therefore the fee receivable in this respect would not be entitled to the benefit of Section 80-0 of the Act.

( 2 ) PETITIONER is aggrieved by thedeletion of these two items from the approval granted by the 1st respondent- board and therefore has sought for relief at the hands of this Court.

( 3 ) SO the two questions that fall forconsideration are : (i) Whether the petitioner is entitled to the benefit u/s 80-0 of the Act in regard to the royalty paid under Article 15. 1 In respect of the right granted under Article 4. 1 and 4. 1. 1 of the agreement. (ii) Whether training of Nigerian personnel in India and training fee paid in regard thereof would be entitled to such deduction.

( 4 ) SO far as the first question isconcerned, it is necessary to set out the relevant article for the purpose of proper appreciation of the matter in dispute. It reads : "4. 1 HMT shall grant to the Company the exclusive right to manufacture the PRODUCTS as may be selected by the COMPANY in consultation with hmt under licence in Nigeria and the exclusive right to sell such PRODUCTS in Nigeria apd other member countries of ECOWAS by providing necessary technical data, information and assistance under this agreement and under a trademark and/or Name as may be mutually agreed by both parties. 4. 1. 1. HMT shall permit the COMPANY to use such Trademark and/or name and to exhibit HMT Logo at such appropriate places as HMT may authorise during the duration of this agreement. " and royalty in relation thereto is dealt with in Article 15. 1 of the agreement, which reads as follows : " 15. 1 Royalty shall be paid at the rate of 2 per cent of value-added for 7 years for granting the exclusive rights to the COMPANY for use in ECOWAS countries the technical information, know-how, designs, trade mark, logo and to manufacture and sell units of each PRODUCT from the first sale of each PRODUCT. " what is provided under Article 4. 1 is only a right of manufacture of products as may be selected by the Nigerian Government in consultation with the petitioner under licence in Nigeria and exclusive right to sell such products in Nigeria and other ecowas countries by providing necessary technical data, information and assistance and also to use the trademark, name and to exhibit the HMT logo. I do not find anywhere in this article or in Article 15. 1 any restriction at ail. What is done is granting of a positive right in favour of the Nigerian Government to do certain things and royalty always arises only in cases where a right is conferred on any person to be utilised and not in cases

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