TMI Blog1999 (11) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961, before applying rule 8(1) of the Income-tax Rules, 1962 ?" The factual position is undisputed and needs to be noted in brief. The assessee is a company in which the public are substantially interested. It is engaged mainly in the business of cultivation, manufacture and sale of tea. For the assessment year 1985-86, the assessee claimed deduction under section 80HHC of the Act in respect of the entire export business of tea manufactured in its own estate. As only 40 per cent. of such turnover has to be taken for income-tax purposes, deduction under section 80HHC in respect of the aforesaid turnover was restricted to 40 per cent. of such turnover by the Assessing Officer. In appeal, the Commissioner of Income-tax (Appeals) (in sho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of deduction under section 80-I, the decision had full application to deduction under section 80HHC, held the Tribunal. For resolution of the dispute between the parties, it is necessary to take note of section 80HHC and rule 8 so far as relevant. Section 80HHC of the Act reads thus : "(1) Where an assessee, being an Indian company or a person (other than a company) resident in India, is engaged in the business of export out of India of any goods or merchandise to which this section applies, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction equal to the aggregate of--- (a) four per cent. of the net foreign exchange realisation ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : B. Income from the manufacture of tea.---(1) Income derived from the sale of tea grown and manufactured by the seller in India shall be computed as if it were income derived from business, and forty per cent. of such income shall be deemed to be income liable to tax. (2) In computing such income an allowance shall be made in respect of the cost of planting bushes in replacement of bushes that have died or become permanently useless in an area already planted, if such area has not previously been abandoned, and for the purpose of determining such cost, no deduction shall be made in respect of the amount of any subsidy which, under the provisions of clause (30) of section 10, is not includible in the total income." Rule 8 refers to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e., after allowing deductions including those encompassed by Chapter VI-A of the Act. In interpreting the provision, the court has to ascertain for what purpose the fiction is created and after ascertaining this, it has to assume all those facts and consequences which are incidental or inevitable corollaries for giving effect to such fiction. When a legal fiction is created, for what purpose, one is led to ask at once, is it so created ? (see State of Travancore Cochin v. Shanmugha Vilas Cashewnutt Factory [1953] AIR 1953 SC 333). After ascertaining the purpose, full effect must be given to the statutory fiction and it should be carried to its logical conclusion and to that end, it would be proper and even necessary to assume all those fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
