TaxTMI 
TaxTMI 
1977 (2) TMI 8
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by section 80-O, the company was entitled to a deduction of 60%. The Income-tax Officer did not accept this case of the assessee. He disallowed a sum of Rs. 10,568 by way of expenditure claimed as deductible by the assessee. He added to this, 60% of Rs. 3,08,698, which was Rs. 1,85,219 and arrived at a sum of Rs. 1,95,787. Against this sum of Rs. 1,95,787 he set off the admitted loss of Rs. 91,154, and thus converted the loss into a profit of Rs. 1,04,633 and after setting off the unabsorbed loss of Rs. 4,991 of the assessment year 1967-68, he arrived at the taxable profit of Rs. 99,642. The Income-tax Officer held that this sum of Rs. 99,642 alone could be taken to be the fees mentioned in section 80-O and 60% of this Rs. 99,642 was Rs.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... way of royalty, commission, fees, etc., received by it" and that a harmonious construction of these expressions would necessarily lead to the inevitable conclusion that the income received by the assessee is the amount that has to be considered. In this view, the Tribunal allowed the appeal and directed the Income-tax Officer to calculate 60% of the gross fees received by the, assessee, namely, Rs. 3,08,698. It is the correctness of this conclusion of the Tribunal that is challenged by the Additional Commissioner of Income-tax, Madras-I, Madras, by applying for and obtaining a reference of the following question for the opinion of this court : "Whether, on the facts and in the circumstances of the case, it has been rightly held that ded....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vice as provided for in the section. The only controversy is as to how the deduction provided for in the section has to be worked out, the Income-tax Officer as well as the Appellate Assistant Commissioner taking the view that the deduction must be worked out on the net income under the head "Fees, royalty, etc." mentioned in the section and the Appellate Tribunal taking the view that the deduction has to be worked out with reference to the gross receipt under the head as provided for in the section. Even in the view taken by the Income-tax Officer as well as the Appellate Assistant Commissioner, they made a factual mistake in assuming that there were certain expenses incurred by the assessee for earning the fees of Rs. 3,08,698. In fact, i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "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 or under section 280-O and without applying the provisions of section 64." We are of the opinion that this definition does not affect the present question at all. That definition is concerned with what constitutes "gross total income" as adopted in section 80-O and that, according to section 80B(5), meant total income computed in accordance with the provisions of this Act. The expression "gross total income" is relevant only for the purpose of finding out whether that income included any income of the category mentioned in section 80-O or not and it has nothing to do with the man....