TMI Blog1981 (6) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... apore income of the assessee. The ITO rejected the assessee's claim for relief under ss 90 91 of the Act on the ground that there was no foreign income after exclusion of the deduction allowed to the assessee under s. 35-B of the IT Act, that had been included in its total income and that therefore the assessee was not entitled to any relief under ss. 90 91 of the Act. 3. On appeal the CIT (Appeals) held that the weighted deduction allowed under s. 35-B should be considered to have been allowed against the entire business income, that is to say the weighted deduction should be allocated proportionately between the Indian business income and the foreign business income. He further held that the manner of such allocation could in the ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 5. The entire disputed in these appeals is with regard to the question whether in determining the amount of foreign income for the purpose of double income relief under ss. 90 91 of the IT Act, the foreign income has to be computed after deducting the extra amount of deduction allowed to the assessee under s.. 35-B of the Act on the items of expenditure entitled to such weighted deduction under that section or the relief should be worked out on such foreign income before the deduction of the extra allowance under s.. 35-B of the Act. There is no dispute on the following facts and figures on the basis which the assessment for these five years have been completed in the case of the present assessee as set out in paragraph I of the Commr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce over and above the normal deduction which the assessee would otherwise have obtained in arriving at its business income is an additional allowance of the business as a whole and not referable, specifically against the foreign business income. The amounts of expenditure incurred in the foreign branches entitled to the weighted deduction under section 35-B are deduction otherwise also under the other provision of Act in computing the income from business but by virtue of falling under one or more of the clauses specified in section 35-B(1)(b) they became entitled to weighted deduction equal to one and one-third times the amount of expenditure incurred prior to 21st March., 1973 and equal to one and one-half times where the of expenditure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther country would result in the same figure or quantum of income. Each country has its own fiscal policies, and tax implement the fiscal policy. The deduction under section 35-B under the Indian IT Act is one such measure calculated to encourage foreign exchange earnings by export or provision of the services by an assessee abroad. It follows therefore that to ascertain what is the foreign income as understood in a business commercial sense the deductions or allowances or reliefs granted to an assessee in either country in implementation of the respective fiscal policies and which are no ordinarily deducted in arriving at the commercial or business profit have to be ignored or excluded from the ordinary concept of income or profit in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 169 (SC). relied on by the assessee and before the CIT (A) and referred to by him, does not exactly deal with the situation as in the present case and we do not say that it supports either the case of the assessee or that of the Department. Again once we come to the conclusion as we have done in the foregoing paragraphs that the extra allowance and the weighted deduction is not attributable against the profits of any particular branch or country but the deduction is due to the assessee against the entire business which is one and indivisible there is ample authority for the finding that no part of the extra allowance can be deducted against the profits from the foreign branches. In this connection reference may be made to the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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