TMI Blog2008 (9) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... d single judge, by a common order dated July 25, 2003 ( A. S. Mani v. Union of India reported in [2003] 264 ITR 5 (Karn)) has allowed both the writ petitions. Aggrieved thereby, these appeals have been filed. 2. The case of the petitioner in W. P. Nos. 23605-606/01 in brief is that, he is a technician; he had entered into an agreement with M/s. Italab (Japan) Ltd. for supply of service in the light of his experience in the international market and his service was rendered from India. He had applied to the appellants for approval of the agreement to enable him to claim deduction, provided under section 80RRA of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The application was rejected on the ground that, no visits to abroad for rendering service is envisaged in the agreement. Assailing the decision, writ petition was filed. 3. The writ petition was contested by the appellants, by filing the statement of objections, inter alia, contending that the intention of the Legislature is to the effect that the benefit under section 80RRA of the Act would be available only to the technicians who work abroad, in order to compensate them for the extra living costs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benefit of deduction would be available for services rendered from India in terms of section 80-O of the Act and there was no such provision under section 80RRA of the Act; (iii) That the deduction under section 80RRA of the Act would be available to a technician employed by a Indian concern and such a situation would arise only if the technician was physically out of India; (iv) That the reliance placed on the decisions in the case of CBDT v. Aditya V Birla reported in [1988] 170 ITR 137 (SC), in the case of C. S. Mathur v. CBDT reported in [1999] 235 ITR 769 (Delhi) and in the case of Mahendra Raj v. Joint Secretary, Government of India reported in [2002] 257 ITR 569 (Delhi), are not applicable and that, the learned single judge has committed an error of fact and law, in allowing the writ petitions and in granting the relief. 9. Sri M. V. Seshachala, learned counsel, contended as follows: (i) That the learned single judge has failed to appreciate that, for granting approval under section 80RRA of the Act to an assessee, the assessee should be rendering service to the foreign companies outside India by staying abroad; (ii) That the deduction under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention is accepted, the very object of the beneficial deduction is defeated and no narrow interpretation is possible. According to the learned single judge, any narrow interpretation would result in the country losing foreign exchange in addition to losing the services. In short, according to the learned single judge, to earn deduction in terms of section 80RRA, outside stay or physical work outside India is not necessary. 12. Having heard the learned counsel and after perusing the record, the point that arises for our consideration is: "Considering the scope and purport of section 80RRA of the Income-tax Act, 1961, whether the learned single judge is justified in holding that, to earn deduction in terms of section 80RRA of the Act, physical stay or physical work outside India is unnecessary?" 13. Chapter VI-A of the Act deals with various types of deductions. In the cases on hand, we are concerned with the deduction under section 80RRA. Incidentally, the provisions contained under sections 80-O, 80R and 80RR of the Act have to be considered as well. 14. Section 80-O of the Act provides for deduction in respect of royalties, etc., from certain foreign enterprises. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a foreign employer or an Indian concern) for services rendered by him outside India. The bone of contention between the parties is, with reference to the words "any service rendered by him outside India". The assessees contend that, it is unnecessary that, the service should be rendered by remaining outside India to avail of the benefit, whereas, the Revenue contends that, to have the benefit of deduction under the section, it is mandatory that the service should be rendered by the assessee by remaining outside India and not otherwise. 19. Though a liberal interpretation has to be given to a provision, the interpretation has to be as per the wordings of the section. If the wordings are clear and unambiguous then the benefits, which are unavailable under the section, cannot be conferred by expanding or misinterpreting the words in the section. In this case, we are concerned with the wordings "any service rendered by him outside India". 20. Sri G. Sarangan relied on the decision of the hono'ble Supreme Court in the case of Aditya V Birla [1988] 170 ITR 137. The question considered therein was "whether any remuneration was received by the assessee in foreign currency from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reign clients outside India. He entered into an agreement with a foreign company at Japan to provide accountancy and management services, in terms of which, for the services rendered, he was to receive an aggregate fee. He claimed the benefit of section 80RRA of the Act, which was rejected by the Central Board of Direct Taxes on the ground that one of the conditions to be satisfied for availing of the benefits under section 80RRA of the Act is that there shall be service rendered outside India and from a perusal of the agreement, it did not provide for physical presence abroad for work and, hence, the case does not qualify for deduction under section 80RRA. A further representation was submitted, which was also rejected. The said action of the Central Board of Direct Taxes was questioned in the writ petition. Considering the contentions, it was held as follows (page 530): "However, we are of the opinion that the petitioner is not entitled to the benefit of section 80RRA of the Act because he has not rendered any service outside India for which he received the remuneration in question. Under clause 3 of the agreement, (which we have quoted herein above), there is no requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary. The exercise undertaken or the interpretation given to the section by the learned single judge, in our opinion, is against the plain reading of the provision and is contrary to all rules of construction, to read words into the statute, which the Legislature in its wisdom has deliberately not incorporated. The construction placed by the learned single judge is against the legislative intendment. The hon'ble Supreme Court in the case of Dadi Jagannadham v. Jammulu Ramulu reported in [2001] AIR 2001 SC 2699 with regard to the principles of interpretation has held as follows (page 2703): "13. We have considered the submissions made by the parties. The settled principles of interpretation are that the court must proceed on the assumption that the Legislature did not make a mistake and that it did what it intended to do. The court must, as far as possible, adopt a construction which will carry out the obvious intention of the Legislature. Undoubtedly. if there is a defect or an omission in the words used by the Legislature, the court would not go to its aid to correct or make up the deficiency. The court could not add words to a statute or read words into it which are not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es so that the assessee and the country will be benefited. According to the learned counsel, in such an event, the requirement of section is satisfied and the assessees are entitled to deduction of income. 37. On the other hand, the learned counsel for the appellants contended that the income must be directly received by the assessee from a foreign employer or an Indian concern in convertible foreign currency and for the services rendered outside India, i.e., by remaining outside. According to them, the purpose for which the deduction is allowed to an assessee is contained in the speech of the Finance Minister on the floor of Parliament at the time of introduction of section 80RRA into the Act, a copy of which has been annexed to the writ appeal, it has been stated as follows (see [1975] 98 ITR (St.) 113, 190) "31. Tax relief in respect of remuneration received from foreign employers by Indian technicians, etc. - At present, Indian technicians, etc, who work for a short period during a financial year with a foreign Government or a foreign enterprise are liable to Indian tax if they remain 'resident in India' for tax purposes in that year, on the whole of the remuneration re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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