Section 80-O deduction must be computed on net income, not gross receipts, following binding Supreme Court principle.

Deduction under Section 80-O was held to be computable on net income and not on gross receipts, following the Supreme Court's binding ruling on the method of computation. The assessee's claim to deduct on gross income was therefore rejected, and the question was answered in favour of the Revenue. The document states that the governing principle requires the deduction to be confined to net income, making the gross-receipts basis impermissible.

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Issues: Whether the assessee was entitled to deduction under Section 80-O of the Income-tax Act on gross receipts or only on net income.

Analysis: The issue was governed by the Supreme Court ruling that deduction under Section 80-O is to be computed on the basis of net income and not on gross income. The referred question was therefore required to be answered in conformity with that binding principle.

Conclusion: The assessee was not entitled to have the deduction computed on gross receipts; the question was answered in favour of the Revenue and against the assessee.

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