Contextual reading of "total income" under section 36(1)(viii) requires deduction to be computed before that clause's own deduction.

In construing section 36(1)(viii) of the Income-tax Act, the expression "total income" must be read in its statutory context and, for that clause, means total income before the deduction under section 36(1)(viii) itself. The later amendment was treated as clarificatory, confirming the existing meaning rather than changing the law. On that construction, the deduction is to be computed on total income before the section 36(1)(viii) deduction and before Chapter VI-A deductions, thereby supporting the assessee's method of computation.

---

---

Issues: Whether, for deduction under section 36(1)(viii) of the Income-tax Act, 1961, the expression "total income" means total income before or after the deduction under that clause.

Analysis: The Court followed its earlier decisions on the same provision and declined to reconsider them in the light of Cambay Electric Supply Industrial Co. and the Karnataka view. It agreed with the Gujarat High Court that the definition of "total income" in section 2(45) applies subject to context, and that in section 36(1)(viii) the expression must be read as total income before making the deduction under that clause itself. The later amendment was treated as clarificatory, confirming the pre-existing meaning rather than changing the law. On that construction, the deduction is to be computed on total income before deduction under section 36(1)(viii) and Chapter VI-A.

Conclusion: The question was answered in the affirmative and against the Revenue. The assessee was entitled to compute the deduction under section 36(1)(viii) on total income before that deduction.

Ratio Decidendi: In construing a deduction provision, the expression "total income" must be read in its statutory context, and where the provision so requires, the deduction is to be calculated on total income before the deduction under that very clause.

---