Net income basis for deduction under section 80MM upheld; gross consulting fees could not be used for relief computation.

Section 80MM relief was held to be computable on net consulting income after deducting the relevant expenses, not on the gross receipt. The Court treated the provision as materially similar to earlier deduction provisions already construed by the Supreme Court and applied that later reasoning, rejecting reliance on a Board circular based on an overruled view. The argument that the earlier Supreme Court ruling was confined to section 80M was rejected because the same principle had been extended to a comparable provision. The Revenue's interpretation was upheld and deduction on gross consulting fees was denied.

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Issues: Whether relief under section 80MM of the Income-tax Act, 1961 is to be computed with reference to the net income from consulting fees or the gross amount received.

Analysis: The language of section 80MM was treated as similar to the provisions considered in earlier decisions on comparable deduction provisions. The Court relied on the later Supreme Court view that the deduction is confined to the amount actually attributable after reducing the relevant expenses, and held that the Board circular issued on the basis of the earlier overruled view could not govern the interpretation of section 80MM. The contention that the earlier Supreme Court decision was limited to section 80M was rejected in light of the subsequent extension of that reasoning to a similar provision.

Conclusion: Relief under section 80MM is to be allowed on the net income and not on the gross income; the question was answered in the negative and in favour of the Revenue.

Final Conclusion: The assessee was denied computation of the deduction on the gross consulting fees, and the Revenue's interpretation of section 80MM was upheld.

Ratio Decidendi: Where a deduction provision is framed in language materially similar to a provision already construed by the Supreme Court, the deduction must be computed on net income after proper apportionment of expenses, and not on the gross receipt, especially when contrary administrative guidance rests on an overruled precedent.

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