Section 35B amendment governed recomputation of double taxation relief for foreign branch income, rejecting the earlier deduction claim.

The Finance Act, 1983 amended section 35B by barring deduction for expenditure incurred on or after 1 March 1983, effective from 1 April 1983. In recomputing double taxation relief for assessment year 1984-85 on income from a foreign branch, the amended statutory position applied, so the earlier rule allowing the deduction could not govern the computation. The lower authorities had overlooked the change in law, and the issue was answered against the assessee and in favour of the Revenue.

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Issues: Whether, for assessment year 1984-85, the deduction under section 35B of the Income-tax Act, 1961 could be excluded while recomputing double taxation relief on income derived from the assessee's foreign branch.

Analysis: The applicable statutory position had been altered by the Finance Act, 1983, which barred deduction under section 35B in respect of expenditure incurred on or after 1 March 1983, with effect from 1 April 1983. As the relevant assessment year fell after the amendment, the earlier position could not govern the recomputation of relief. The lower authorities had overlooked the change in law.

Conclusion: The question was answered in the negative against the assessee and in favour of the Revenue.

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