TMI Blog1997 (1) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... and insurance of motor cars can be included in the expenditure incurred on running and maintenance of motor cars for purpose of restriction under section 37(3A) of the Income-tax Act ? (ii) the Tribunal is right in law in holding "repairs and insurance are governed by section 31 and takes are regulated under section 30 such expenditure cannot be construed as running and maintenance expenditure of motor cars described under section 37(3A) of the Act ? 2. Whether, on the facts and in the circumstances of the case and also on an interpretation of the relevant provisions, the assessee is entitled to deduction under section 80HHC of the Income-tax Act, 1961 ? " The relevant facts are as follows : The assessee is a company engaged in sale a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w in the appeal filed by the Revenue. It is not disputed before us that the claim regarding expenditure incurred by the assessee for repair and insurance of the car would come under section 31 of the Income-tax Act, 1961. But, according to learned standing counsel for the Revenue, the non obstante clause in section 37(3A) would exclude the provisions contained under section 31(i) and therefore, the provisions contained under section 37(3A) would be applicable in the case of the assessee. On the other hand, learned counsel for the assessee would contend that section 37(3A) would take in only those matters which come under section 37(1) and not under section 31. In order to appreciate rival arguments it is necessary to refer to the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... follows : " Notwithstanding anything contained in sub-section (1), where the expenditure or, as the case may be, the aggregate expenditure incurred by an assessee on any one or more of the items specified in sub-section (3B) exceeds one hundred thousand rupees, twenty per cent. of such excess shall not be allowed as deduction in computing the income chargeable under the head 'Profits and gains of business or profession'. " Relevant portion of section 37(3B) reads as follows : " The expenditure referred to in sub-section (3A) is that incurred on--... (ii) running and maintenance of aircraft and motor cars ; or... (c) expenditure on running and maintenance of aircraft and motor cars shall include,-- (i) expenditure incurred on cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of Bombay and Calcutta in CIT v. Chase Bright Steel Ltd. (No. 1) [1989] 177 ITR 124 (Bom), CIT v. Tungabhadra Industries Ltd. [1994] 207 ITR 553 (Cal) and CIT v. Price Waterhouse [1994] 207 ITR 564 (Cal). The second question relates to the claim put forward by the assessee under section 80HHC of the Income-tax Act, 1961, for a sum of Rs. 1,52,764 on the turnover relating to the export of cardamom. As per the returns, the assessee had suffered loss in the business of export of cardamom. The assessing authority disallowed the claim. It took the view that as per the provisions of section 80AB any deduction under section 80 can be allowed only if the gross total income includes any income of the nature specified in that section. Since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the income included in the gross total income.--Where any deduction is required to be made or allowed under any section (except section 80M) included in this Chapter under the heading 'C--Deductions in respect of certain income' in respect of any income of the nature specified in that section which is included in the gross total income of the assessee, then, 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 (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 defi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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