2002 (8) TMI 92 - HC - Income Tax

High Court rules against ITAT, denies bank's 35B relief, cites Finance Act changes.

The High Court of Madras held that the Income-tax Appellate Tribunal erred in instructing the Assessing Officer to recalculate the D.I.T. relief without ... Export Markets Development Allowance, Weighted Deduction - 'whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in directing the Assessing Officer to recompute the D.I.T. relief admissible to the assessee on the income derived from the foreign branch at Bangkok without reducing the deduction allowable under section 35B of the Income-tax Act, 1961?'. - The Tribunal as also the Commissioner have completely missed the effect of the change in the law brought about by the Finance Act, 1983, which provided that no deduction under section 35B shall be allowed in relation to expenditure incurred on or after March 1, 1983. That amendment came into force with effect from April 1, 1983. As the assessment year with which we are concerned is 1984-85, the assessee is not entitled to claim any relief under section 35B in relation to the expenditure incurred on or after March 1, 1983. The question referred to us is, therefore, answered in favour of the Revenue and against the assessee. The High Court of Madras ruled that the Income-tax Appellate Tribunal was wrong in directing the Assessing Officer to recompute the D.I.T. relief without reducing the deduction under section 35B for a bank with a branch in Bangkok. The court found that the bank was not entitled to claim any relief under section 35B for the assessment year 1984-85 due to changes in the law brought about by the Finance Act, 1983.