2004 (5) TMI 530

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....1961. 2. The first issue raised in this appeal is that the Commissioner of Income-tax (Appeals) has erred in confirming the deduction under section 80RRA of the Income-tax Act, 1961, at 75 per cent. of the net remuneration of Rs. 96,143 after deducting total expenses incurred from the gross remuneration received from M/s. Citizen Watch Co. Ltd., Hongkong. 3. The assessee having received remuneration for services rendered outside India had claimed the deduction available under section 80RRA. The Assessing Officer while computing the deduction adjusted the expenditure incurred by the assessee against the receipt of remuneration and only the net of the remuneration was considered. This was confirmed by the Commissioner of Income-tax (App....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....t or equivalent for services. Aiyar's Judicial Dictionary explains the word "remuneration" as consideration for services rendered. Learned counsel therefore submitted that there is no concept of income and expenditure imputed in the word "remuneration". Income is the one to be computed by setting of the relevant expenditure against relevant receipts. Remuneration is the compensation paid for services rendered for which there is no need of setting off of accounts inter se. 6. The Learned counsel in this context placed reliance on the Circular issued by the Central Board of Direct Taxes wherein the intended purposes of section 80RRA as introduced by the Finance Act, 1975, are explained (Circular No. 169, dated June 23, 1975 - Taxman's Dire....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s the compensation paid for services rendered. There is no concept of adjusting expenditure against such remuneration. Remuneration is not in the nature of business receipts. The setting off of expenditure against receipt is necessary where the income is required to be computed. In the case of remuneration there is no cause for any such computation. This is because the remuneration is always predetermined on the basis of the terms of the service contract. The computation of remuneration is not dependent on the turnover or price level, etc. as in the case of business profit. The remuneration is fixed either on time basis or on piece basis. It is to be seen that remuneration is always predetermined. Therefore, the concept of netting cannot be....