1976 (11) TMI 109 - AT - Income Tax

Summary

Issues:
1. Eligibility of the assessee for deduction under section 80RR of the Income Tax Act.
2. Whether the income received by the assessee qualifies as professional income from a foreign source.
3. Interpretation of the provisions of section 80RR in relation to the nature of income derived by the assessee.

Detailed Analysis:
The judgment pertains to three departmental appeals consolidated into a common order by the Appellate Tribunal ITAT MADRAS-B. The appeals arose from the Income-tax assessments for the assessment years 1970-71, 1971-72, and 1972-73. The primary issue revolved around the eligibility of the assessee, Shri K. Srinivasacharya, for deduction under section 80RR of the Income Tax Act. The Income Tax Officer (ITO) had initially granted the deduction under section 80RR for the mentioned assessment years. However, subsequently, the ITO initiated action under section 154 to withdraw the deduction based on the contention that the income shown by the assessee under the head "Salaries" made him ineligible for the relief under section 80RR.

Upon appeal before the Appellate Assistant Commissioner (AAC), the assessee argued that the income received was for research work done as an author, and the employer, the French Government, had issued a certificate specifying the nature of the work. The AAC held that the assessee satisfied the conditions of section 80RR and was entitled to the deduction. The Revenue, aggrieved by the AAC's decision, filed appeals challenging the interpretation of section 80RR by the AAC.

During the proceedings, it was established that the assessee received remuneration for preparing a descriptive catalogue of Sanskrit manuscripts, which was considered as professional income from a foreign source. The key contention was whether the income received by the assessee qualified as professional income under section 80RR. The Tribunal analyzed the provisions of section 80RR, which allow a deduction for professional income derived by an individual in the exercise of their profession from a foreign source. The Tribunal observed that the assessee, being an author engaged in research work for the French Government, satisfied the criteria for claiming the deduction under section 80RR.

The Tribunal emphasized that the nature of the income, being derived from professional services rendered as an author, was crucial in determining eligibility for the deduction under section 80RR. Despite the income being categorized as salary in the returns, the Tribunal held that the essence of the income, as established by the certificates and the nature of work done, aligned with the requirements of section 80RR. The Tribunal concluded that there was no mistake apparent from the record in the original order granting the deduction under section 80RR, and upheld the AAC's decision, dismissing the appeals of the Revenue.