Compressed air from the turbo runs through the "charge cooler" which is a air-to-water cooler. The water is cooled in the external radiator, which requires a header tank, which is what the little bottle is. Your car uses one instead of a air-to-air cooler becuase of the space in the engine bay. They offer the advantage over air-to-air coolers that they are more consistant in the amount they cool the charge.

Who did the conversion on that Ka? You don't see many of them with MFI these days, and the engine bay looks very similar to a blue Ka from a good while back. I'm guessing that its got a custom radiator?

JAmes.