TaxTMI 
TaxTMI 
TaxTMI 
2005 (9) TMI 34
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.... 143(1)(a) of the Income-tax Act, 1961 (hereinafter referred to as the "said Act") and by intimation dated January 27,1997, the total income was computed at Rs. 10,26,740. The Assessing Officer had allowed a deduction of only Rs. 8,83,946 under section 80-O as against the claim of Rs. 17,05,360 by the assessee. The assessee had claimed the deduction under section 80-O in respect of the gross income by way of fees in convertible foreign exchange, whereas the Assessing Officer had made the adjustment allowing the deduction against the net income received in convertible foreign exchange. Being aggrieved by this action on the part of the Assessing Officer, the assessee had filed an appeal before the Commissioner of Income-tax (Appeals) challenging the adjustment made by the Assessing Officer as aforesaid. The Commissioner of Income-tax (Appeals) allowed the appeal of the assessee and cancelled the adjustments holding that: "Whether or not deduction under section 80-O is admissible with reference to the gross foreign exchange brought into India or the profit included in the gross total income is a debatable question of law on which contrary opinions are conceivable. Adjustment of the ....
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....there was no doubt or debate with regard to this issue in so far as the Assessing Officer in Delhi was concerned and that merely because a Bench of the Tribunal in Calcutta had taken a different view, that did not detract from the position that the Assessing Officer was bound by the decision of the jurisdictional High Court (Delhi) and in so far as he was concerned, the debate had been settled. Therefore, while he was processing the return in 1995, the matter was clear and well-settled that the deduction was to be allowed on net income and not on the gross income. Accordingly, he was entitled to make the adjustments under section 143(1)(a). For these reasons, the Tribunal reversed the order of the Commissioner of Income-tax (Appeals) and upheld the adjustment made by the Assessing Officer for computation of deduction under section 80-O with respect to net foreign income. In this appeal, the assessee seeks to raise the following questions as substantial questions of law: "I. Whether the deduction under section 80-O is allowable on the gross amount of fees for technical services received by the assessee particularly when the deduction is allowable with reference to the convertible ....
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....7 doubting the ratio in CIT v. Marketing Research Corporation [1987] 61 CTR 204 (Delhi). However, the Full Bench, after examining the matter (CIT v. Chemical and Metallurgical Design Co. Ltd. [2001] 247 ITR 749 (Delhi)) in detail, came to the conclusion that section 80AB applied to the provisions of section 80-O of the Act and that the mode of computation as indicated in section 80AB had to be applied while working out the deductions under section 80-O of the Act. It answered the reference accordingly. This clearly implied that the deductions were to be calculated on the basis of net income and not gross receipts. It is thereafter that the impugned decision of the Tribunal was rendered on October 12, 2002. Therefore, from the above discussion, it is clear that the deduction under section 80-O has to be made in terms of section 80AB and, therefore, the deduction has to be on the basis of net income and not on the basis of gross receipts. Clearly, this takes care of all the questions sought to be raised by the assessee in this appeal. However, the assessee submitted that even though on the merits the deduction has to be given on the basis of net income, yet adjustments could not be ....
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....tes v. Under Secretary, CBDT [1996] 218 ITR 298 and some other High Courts as well." As a principle of law there cannot be any exception to what was observed by the Division Bench in that case. However, the question remains whether that principle is applicable to the facts of the present case. It is clear that if the issue was debatable, then the adjustment could not be made under section 143(1)(a), but the fact of the matter is that the issue was not debatable in 1995 or in 1997 when the return was filed and when the intimation under section 143(1)(a) was issued respectively. The position, in so far as Delhi was concerned, was settled by the decision of this court in the case of CIT v. Marketing Research Corporation [1987] 61 CTR 204 as far back as in 1987. Learned counsel for the petitioner also urged that although the Full Bench decision in the case of CIT v. Chemical and Metallurgical Design Co. Ltd. [2001] 247 ITR 749 (Delhi), settled the issue that decision had come in 2000 and the relevant point of time for consideration was when the return was filed. For this, he again relied upon the decision in Samtel Color Ltd. [2002] 258 ITR 1 (Delhi) and in particular to the finding ....