TMI Blog1981 (7) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... ee-company applied to the Central Govt. as early as 22nd August, 1969, for approval of its agreement with the foreign company so as to qualify itself for relief under s. 80-0 of the I.T. Act, 1961, for the assessment year under consideration. The Central Govt. in the Ministry of Foreign Trade accorded its approval by a letter dated 21st of May, 1971, to the assessee. In that letter of the Govt. of India, it was stated that the approval would take effect from the assessment year 1969-70. The ITO held that, in view of the language of s. 80-0, the assessee-company was not entitled to the relief under the section since the approval of the Central Govt. was not accorded before the 1st of October of the relevant assessment year. He, accordingly, denied relief under s. 80-0 to the assessee. However, in view of the letter of the Govt. of India stating that the approval would take effect from the assessment year 1969-70, he sought clarification so that he could later rectify the assessment suitably in the light of the clarification. There was an appeal before the AAC. The AAC held that under s. 80-0, as it stood prior to its amendment, by the Finance (No. 2) Act of 1971, the approval of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It would be instructive in this connection to bear in mind the provision of s. 80-0 as the same was before its substitution by the Finance (No. 2) Act of 1971, with effect from 1st of April, 1972. The said provision was as follows: " 80-0. Deduction in respect of royalties, etc., received from certain foreign companies.-Where the gross total income of an assessee being an Indian company includes any income by way of royalty, commission, fees or any similar payment received by it from a foreign company in consideration for the use of any patent, invention, model, design, secret formula or process, or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided or agreed to be made available or provided to the foreign company by the assessee, or in consideration of technical services rendered or agreed to be rendered to the foreign company by the assessee, under an agreement approved by the Central Government in this behalf before the Ist day of October of the relevant assessment year, there shall be allowed a deduction of the whole of such income in computing the total income of the assessee." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not misused or misapplied in certain cases, that is to say, in order to be entitled to the relief, the agreements generating income should be such which would have the approval of the Central Govt.in so far as that requirement is met, that is to say, that the agreements generating the income which are contemplated by the Act for the purpose of relief should have the approval of the Central Govt., that provision, in our opinion, is mandatory but the question is, whether the time at which the approval is to be given is also mandatory or not. In this case, admittedly, the approval of the Central Govt. had been accorded with effect from the assessment year 1969-70. Therefore, for the relevant assessment year, the approval will be effective but the approval was actually granted on a date subsequent to the Ist day of October, 1969, which is the relevant date mentioned in the section. Now, the construction which the learned advocate for the revenue is asking us to make would entail reading the section in the manner following: " approved by the Central Government in this behalf which was accorded before Ist day of October of the relevant assessment year ". Now, the expression which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it was observed that the question whether the provisions in a statute were directory or imperative had frequently arisen in that country, but it had been said that no general rule could be laid down and that in every case the object of the statute must be looked at. When the provisions of a statute related to the performance of a public duty and the case was such that to hold null and void acts done in respect of this duty would work serious general inconvenience or injustice to persons who had no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it had been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of acts done. These views were also echoed in Maxwell on the Interpretation of Statues 11th Edn., p. 364, where it was observed as follows: " It has been said that no rule can be laid down for determining whether the command is to be considered as a mere direction or instruction involving no invalidating consequence in its disregard, or as imperative, with an implied nullification for disobedience, beyond the fundamental one that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple was reiterated by the Supreme Court in the case of L. Hazarimal Kuthiala v. ITO [1961] 41 ITR 12 at p. 16. See also in this connection, the observations of the Supreme Court in the case of State of U.P. v. Manbodhan Lal Srivastava, AIR 1957 SC 912 at p. 917. In the context of the provisions of the W.T. Act, the said Bench decision was reiterated by the Orissa High Court in the case of Subhas Chandra Ghosh v. State of Orissa [1970] 26 STC 211. Our attention was also drawn to the observations of the Division Bench of this court in the case of CIT v. Clive Insurance Co. Ltd. [1972] 85 ITR 531, where at p. 577, the court observed as follows: "To us, however, it appears that section 49D which has been enacted for the purpose of granting relief to an assessee should be so construed as will serve the object and purpose of the said section and the said section should be construed liberally in favour of an assessee and necessary relief should be granted whenever the requisite conditions are fully satisfied. It is to be noted that in the decision of the Supreme Court in the case of Commissioner of Income-tax v. Raja Benoy Kumar Sahas Roy [1957] 32 ITR 466 (SC), the Supreme Court has re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
