TMI Blog2001 (9) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... year is 1984-85 and the relevant accounting period is 1983. So far as questions Nos. 1 to 4 are concerned, it is common ground between the parties that the issues are concluded by the decisions of the apex court or this court and, hence, it is not necessary to set out the facts in detail. Questions No. 1 is in relation to two items, viz., (i) reimbursement of medical expenses, and (ii) house rent allowance paid to the managing directors and whether the said items are required to be considered for the purpose of computing the limits for disallowance under section 40(c) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). In so far as the reimbursement of medical expenses is concerned, this court in the case of Aroon K. Basak v. Union of India [1999] 236 ITR 931 (Delhi) has laid down that the same is required to be considered for the purpose of computing disallowance under section 40(c) of the Act. As far as house rent allowance is concerned, the apex court has in the case of CIT v. Mafatlal Gangabhai and Co. (P.) Ltd. [1996] 219 ITR 644 laid down that the said item is not to be included for the purpose of disallowance under section 40(c) of the Act. Question No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Shri J.P. Shah, learned counsel for the assessee. It was submitted by Mr. Nayak that the provisions of section 80AB of the Act are applicable to all the sections which fall under the heading "C.-- Deductions in respect of certain incomes" and that section 80HHC is a provision which falls within the said heading. Elaborating on the contention raised, it was submitted that it was necessary that there should be profits from export activity and in the absence of such profits from export business the Tribunal was clearly in error in hold ing that the assessee was entitled to deduction under section 80HHC of the Act against the income from other head, viz., capital gains, as in the present case. Reliance was placed on the following decisions in support of his submissions: CIT v. V.T. Joseph [1997] 225 ITR 731 (Ker); CIT v. K.K. Doshi and Co. [2000] 245 ITR 849 (Bom); H.H. Sir Rama Varma v. CIT [1994] 205 ITR 433 (SC); and CIT v. M.K. Raju Consultants (P.) Ltd. [1999] 239 ITR 232 (Mad). As against this, on behalf of the assessee, Mr. Shah has submitted that the provisions of section 80HHC were unambiguous and on a plain reading it was not possible to state that the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in clause (a) are the following namely:- (i) gricultural primary commodities, not being produce of plantations; (ii) mineral oil (iii) minerals and ores; and (iv) such other goods or merchandise as the Central Government may, by notification in the Official Gazette, specify in this behalf. (3) No deduction under clause (b) of sub-section (1) shall be allowed unless the assessee had, during the immediately preceding previous year, exported out of India goods or merchandise to which this section applies. Explanation.--For the purposes of this section,-- (a) 'convertible foreign exchange' means foreign exchange which is for the time being treated by the Reserve Bank of India as convertible foreign exchange for the purposes of the Foreign Exchange Regulation Act, 1973 (46 of 1973), and any rules made thereunder; (b) 'export turnover' means the sale proceeds of any goods or merchandise exported out of India, but does not include freight or insurance attributable to the transport of the goods or merchandise beyond the customs station as defined in the Customs Act, 1962 (52 of 1962)." "80AB. Where any deduction is required to be made or allowed under any section inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplated to be governed by the provisions of section 80AB of the Act. Section 80AB of the Act was introduced by the Finance (No. 2) Act of 1980, with effect from April 1, 1981. While section 80HHC was introduced by the Finance Act, 1983, with effect from April 1, 1983. Therefore, the contention raised on behalf of the Revenue that section 80AB should override the provision of section 80HHC cannot be accepted as it is not possible to hold that the Legislature was not aware of the difference in other provisions falling under heading C of Chapter VI-A and the language employed in section 80HHC of the Act. On the contrary, there is an inherent indication in the Act when one reads the provision of section 80HHB of the Act which was introduced by the Finance Act, 1982, with effect from April 1, 1983. The language employed in both the provisions is entirely different though both the provisions have been made effective from the same date. Considering the matter from a slightly different angle, the provision of section 80HHC requires that deduction is to be made from the total income of an assessee. The scheme of the Act as can be seen is to fasten the charge of income-tax by virt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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