TaxTMI 
TaxTMI 
2006 (7) TMI 143
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....in holding that the appellant is entitled for the relief in respect of deduction under section 80-O of the Act? Whether, on the facts and circumstances of the case, the Tribunal is correct in law in entertaining the appeal by condoning the delay?" I. T.R.C.No.25/2000: This reference is again at the instance of the Revenue. The assessee received income in foreign currency and it was brought into India. The assessee claimed deduction under section 80-O of the Income-tax Act, 1961, to the extent of 50 per cent. of the amount so brought to India. The amount of foreign currency that was brought to India was Rs. 26,41,795 and 50 per cent. of this was Rs. 13,20,877 which was claimed as deduction. The same was rejected by the Assessing Officer. An appeal was filed and the appeal was allowed. Aggrieved by the same the Revenue went in appeal before the Tribunal. The Tribunal dismissed the appeal filed by the Revenue. Thereafter a reference was sought for by the Revenue and the Tribunal has chosen to refer the following questions of law: "(i) Whether the Tribunal was right in law in holding that the assessee is entitled to deduction under section 80-O of the Incometax Act, 1961, to the ex....
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....ether, on the facts the Tribunal was at liberty to ignore the judgment of the jurisdictional High Court in the case of CIT v. M. N. Dastur and Co. rendered on June 4, 2001, in C. P. No. 580/1998? (c) Whether, on the facts and circumstances of the case, the appellant was entitled to deduction under section 80-O in respect of the gross receipts from professional or technical services rendered abroad and not in respect of net receipts ?" Heard learned counsel for the parties. Sri Kumar, learned senior counsel for the assessee, would essentially argue that section 80-O, if read carefully would show that what is referable is total income. Total income has been defined under section 80AB of the Act. Learned counsel refers to section 80AB to say that section 80AB has to be excluded from the purpose of total income and for the purpose of deduction in the matter of foreign exchange. He would say that the Tribunal has committed a serious error in reading section 80AB also for the purpose of deduction under section 80-O of the Act. Learned counsel also would argue that the Tribunal has grossly erred in not following the jurisdictional High Court's order dated June 4, 2001, in C. P. No. 580....
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....er cent. of the income so received in, or brought into, India, in computing the total income of the assessee. The gross total income has been defined in clause (5) of section 80AB the same would read as under: "80AB. Where any deduction is required to be made or allowed under any section included in this Chapter under the heading'C.- Deductions in respect of certain incomes' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the de auction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income. "80B.(5) 'gross total income' means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter." Section 80AB has been considered by various High Courts for the purpose of deduction under section 80-O of the ....
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.... relating to section 80-O." Recently, a Division Bench of the Delhi High Court again ruled that deduction under section 80-O was available only on the net income and not on the gross receipts of fees in convertible foreign exchange. Therefore the adjustments could be made by the Assessing Officer under section 143(1)(a). The Calcutta High Court in CIT v. M. N. Dastur and Co. P. Ltd. [2000] 1 243 ITR 10 has ruled as under (headnote): "A careful reading of the provisions of section 80AB of the Incometax Act, 1961, makes it clear that whatever deductions are allowed in respect of any type of income specified in the various provisions under the head 'C' of Chapter VI-A will be subject to the provisions of section 80AB. The provision of section 80AB starts with a non obstante clause, 'notwithstanding anything contained in that section' for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with provisions of this Act, 'shall alone be deemed to be amount of income for the purpose of deduction under that section'. Therefore, where income is received by way of convertible foreign exchange, it shall be computed in acco....