TMI Blog2000 (1) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... on 80-O of the Income-tax Act, 1961, only on the net income from the foreign exchange, the Tribunal was justified in law in allowing the assessee to agitate again the issue whether the relief under section 80-O of the Income-tax Act, 1961, will be allowed on the gross or net income ? 3. Whether in view of the insertion of section 80AB with effect from April 1, 1981, and in view of the decision of the Supreme Court in Distributors (Baroda) P. Ltd. v. Union, of India [1985] 155 ITR 120, the Tribunal was justified in holding that two views are possible on the point whether relief under section 80-O of the Income-tax Act, 1961, will be allowable on the gross income from foreign exchange ? 4. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in cancelling the order of the Commissioner under section 263 of the Income-tax Act, 1961 ?" In R. A. No. 8 (Cal) of 1992, the following questions are referred: "1. Whether, on the facts and in the circumstances of the case and on a correct interpretation of sections 80-O and 80AB of the Income-tax Act, 1961, the Tribunal was justified in law in holding that the deduction under section 80-O of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 37(3A) and (3B) and withdraw excess amount allowed under section 80-O of the Act. Being aggrieved the assessee-company agitated the matter before the Tribunal. The Tribunal has considered the order passed by the Commissioner of Income-tax under section 263 of the Act. According to the Tribunal, the provisions of section 37(3A) and (3B) are not applicable as the expenses on motor car repairs and insurance are otherwise allowable under sections 30 to 36 of the Act. For claim under section 80-O, the Tribunal has considered the decisions of the apex court in Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243 and in the case of Distributors (Baroda) P. Ltd. v. Union of India [1985]155 ITR 120. The decision of Cloth Traders (P.) Ltd.'s case [1979] 118 ITR 243 (SC), still holds the field for purposes of deduction under section 80-O though in the case of Distributors (Baroda) P. Ltd. [1985] 155 ITR 120 (SC), the decision in Cloth Traders (P.) Ltd.'s case [1979] 118 ITR 243 (SC) has been overruled. In the case of Distributors (Baroda) P. Ltd. [1985] 155 ITR 120 (SC), the judgment was with reference to section 80M of the Act. The Tribunal also held that the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable while allowing the deduction under section 80-O. Though section 80AB starts with a non obstante clause, it only governs what it covers and cannot govern what the section itself does not deal with. The words convertible foreign exchange received in or brought into India is income, the provision of section 80AB has no further role to play. Therefore, if the convertible foreign exchange is received in India that is income for the purpose of deduction under section 80-O of the Act. Then the words convertible foreign exchange received in or brought into India will be superfluous. On this line, he submits that the deduction under section 80-O should be allowed on convertible foreign exchange received in or brought into India without any deduction of the expenditure incurred in India. On the other hand, learned counsel for the Revenue, Shri Agarwal, submits that after the decision of the Supreme Court in the case of Distributors (Baroda) P. Ltd.'s case [1985] 155 ITR 120, no scope is left to the assessee to claim deduction on the gross foreign exchange received in India. The deduction under section 80-O will be on the net income that is after computing the gross total income i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the relief in respect of dividend received from domestic company is available on the actual amount of dividend received or only to the net amount under section 80M. The apex court has held the words "such. income" cannot have reference to the quantum of the income included but refer only to the category of the income included, viz., income by way of dividends from a domestic company which can only mean the full amount of dividend from an Indian company and the apex court has approved the decision of the Bombay High Court in New Great Insurance Co. Ltd.'s case [1973] 90 ITR 348 and Darbhanga Marketing Co. Ltd.'s, case [1971] 80 ITR 72 of this court. In the case of Distributors (Baroda) P. Ltd.'s case [1985] 155 ITR 120, the apex court has overruled its earlier decision in Cloth Traders (P.) Ltd. v. Addl. CIT [1979] 118 ITR 243 and, at page 141, their Lordships observed as under : "The decision in Cloth Traders (P.) Ltd.'s case [1979] 118 ITR 243 (SC), is inconsistent with that in Cambay Electric Supply Co.'s case [1978] 113 ITR 84 (SC). Both cannot stand together. If one is correct, the other must logically be wrong and vice versa. It is, therefore, necessary to resolve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ign companies were initially allowed under section 85C of the Act. The provision of that section was substituted by section 80-O in the year 1968 and that section 80-O is further amended by the Finance (No. 2) Act, 1971, with effect from April 1, 1972, and also amended by the Finance Act, 1974, but made effective from April 1, 1972. By the amendment in 1984 the deduction was reduced from all of such income to an amount equal to fifty per cent. of the income so received in, or brought into India. Learned counsel, for the assessee, Shri Syali emphasized on the fact that in the case of Distributors (Baroda) P. Ltd. [1985] 155 ITR 120, the Supreme Court has not overruled the decision in Cloth Traders (P.) Ltd.'s case [1979] 118 ITR 243 (SC), so far the interpretation given of the Bombay High Court in New Great Insurance Co. Ltd.'s case [1973] 90 ITR 348 and the decision of the Calcutta High Court in Darbhanga Marketing Co. Ltd.'s case [1971] 80 ITR 72. Their Lordships in the case of Distributors (Baroda) P. Ltd. [1985] 155 ITR 120 (SC), considered the provisions of section 80M as existing in the relevant assessment year. Therefore, to that extent the decision of the apex court in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion above it is made clear that after the insertion of section 80AB, the argument of Shri Syali has no force that the decision of the Bombay High Court in the case of New Great Insurance Co. Ltd. [1973] 90 ITR 348 and the decision of this court in the case of Darbhanga Marketing Co. Ltd. [1971] 80 ITR 72, have been approved by the Supreme Court in its decision in the case of Cloth Traders (P.) Ltd. [19791 118 ITR 243. Therefore, the deduction should be allowed on the gross income received in India without taking into account the expenses incurred in India. A careful reading of the provisions of section 80AB make it clear that whatever deductions are allowed in respect of any type of income specified in the various provisions under the head ".C", Chapter VI-A, that will be subject to the provision of section 80AB. The provision of section 80AB starts with a non obstante clause, "notwithstanding anything contained in that section for the purpose of computing the deduction under that section, the amount of income of that nature, as computed in accordance with the provisions of this Act, shall alone be deemed to be the amount of income for the purpose of deduction under that section" ..... X X X X Extracts X X X X X X X X Extracts X X X X
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