Sanjib Banerjee, J. - (1.) The challenge herein is to the vires of Sec. 44D(b) of the Income Tax Act, 1961 on the basis of a Supreme Court dictum. However, as interesting as the legal issue may be, it is of limited import since the relevant provision is dated; and any adjudication either way may have little impact as it would be confined to agreements of similar kind made after March 31, 1976 and before April 1, 2003.
(2.) The issue pertains to the machinery of presumptive tax provided for in the provision and the contention of the petitioners that the apparent shutting out of an assessee's option to claim deductions from the gross income in respect of the matters covered by the provision is unreasonable and, as such, falls foul of Article 14 of the Constitution of India.
(3.) Under an agreement of August 2, 2000, the second petitioner foreign company agreed to provide certain services to the first petitioner Indian company against compensation to be charged at cost without any mark -up or profit. The technical services that the foreign company agreed to provide to its Indian subsidiary included management services, management information services, systems development and computer usage, communication services, engineering services, manufacturing services and the like. Sec. 1.2 of the said agreement of August 2, 2000 is of relevance in the present context: "Section 1.2. Compensation Recipient shall pay Provider for all services and materials provided pursuant to this agreement, upon receipt of an invoice from Provider. Provider shall provide invoices to Recipient listing the services that Provider has provided to Recipient and/or which Provider has obtained from third parties on behalf of Recipient, during each calendar month. Each invoice shall be submitted no later than the fifteenth (15th) day following the end of each calendar month. Each invoice shall identify the compensation that is due to Provider to compensate it for all costs of providing such services. Only costs, without any mark -up shall be invoiced.";