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Issues:
1. Interpretation of Section 80RR of the Income Tax Act. 2. Allocation of expenses against foreign receipts for tax relief. Detailed Analysis: 1. The appeal before the Appellate Tribunal ITAT BOMBAY-A was regarding the interpretation of Section 80RR of the Income Tax Act for the assessment year 1984-85. The primary issue raised was whether the CIT(A) erred in directing the Income Tax Officer (ITO) to allow relief under Section 80RR on the full amount of Rs. 3,91,570 without allocating any portion of the expenditure incurred in India to foreign receipts. 2. The Departmental Representative argued that some portion of the expenses needed to be allocated against the foreign receipts in accordance with Section 80AB of the Act. He cited various judicial precedents, including the Supreme Court decision in CIT vs. P.K. Jhaveri, the Andhra Pradesh High Court decision in CIT vs. Anakapalli Co-operative Marketing Society, and the Bombay High Court decision in CIT vs. Mercantile Bank Ltd., to support the contention of allocation of expenses against foreign receipts for tax relief. 3. The counsel for the assessee, a well-known playback singer with a global reputation, highlighted that the foreign income earned, amounting to Rs. 3,50,385, was received as net income without any corresponding expenditure incurred abroad in foreign exchange. The income was generated from concerts organized by sponsors who bore all expenses related to the concerts, including travel costs, thereby negating the need for the singer to incur any expenses abroad. 4. Moreover, the nature of expenses reflected in the income and expenditure account, such as telephone charges, car maintenance, bank charges, salaries, stationery, printing, and insurance, indicated that these expenses were not related to the foreign income earned. The singer received payments in foreign currency, which were then converted to rupees and deposited in the bank, with no direct correlation between the expenses incurred in India and the foreign receipts. 5. The Tribunal noted that all expenses were indeed incurred in India, and the singer did not bear any expenses for the concerts organized abroad, which generated the foreign income. The sponsors covered all expenses for the concerts and the singer's stay in foreign countries. The Tribunal considered the details provided by the singer, including sponsorship information for tours in various countries, to ascertain the nature of expenses and their relation to the foreign income earned. 6. After considering the arguments from both sides, the Tribunal concurred with the CIT(A) that there was no justification for attributing any portion of the Indian expenses to the foreign receipts earned by the singer. The Tribunal affirmed that the singer, being a renowned artist performing concerts abroad, had all expenses covered by sponsors, and the nature of Indian expenses did not align with the foreign income. Therefore, the Tribunal upheld the CIT(A)'s decision, dismissing the appeal by the Department. This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, and the Tribunal's reasoning leading to the dismissal of the Department's appeal.
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