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TMI Blog1996 (2) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... to earning of the foreign exchange, could not be reduced from the income earned from out of India for purposes of calculating the quantum of deduction under section 80-O. The learned counsel, Mr. Patil submitted that for the assessment year 1982-83 the Tribunal in the case of the assessee in I.T.A. No. 408/Bom./1988 had considered the identical issue and after considering the provisions of section 80AB had held that the deduction under section 80-O has to be with reference to the income computed under the Act, which income is included in the gross total income. He submitted that at the time when this decision was taken there was a similar view of the Bombay Tribunal in I.T.A. No. 1849/Bom./1991 for assessment year 1986-87 in J.B. Boda & Co. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... subject and the same should be followed. He further submitted that if the Tribunal is not in a position to follow the later decision in J.B. Boda & Co. P. Ltd.'s case then considering the fact that there are two views on the subject it would be more appropriate to refer the matter to a larger Bench. The Departmental Representative, however, submitted that the later decision in the case of J.B. Boda & Co. P. Ltd. does not refer to the provisions of section 80AB while for the assessment year 1982-83 in the case of the assessee itself, after reference to the provisions of section 80AB, it was concluded that the deduction has to be with reference to the income that is computed according to the provisions of the Act. He further submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that are contained at page 817 where it was held that the deduction under sections 80J and 80HH has to be with reference to the income computed and not with reference to the commercial profits. He submitted that the Orissa High Court in CIT v. Agency Marketing Co-operative Society Ltd. [1993] 210 ITR 881 was concerned with the deduction to be given under section 80P and it was held that the deduction has to be with reference to the profit and gains attributable to the activities and that section 80AB aims at ensuring that the deduction does not exceed the net income under a particular source. 6. The rival submissions in regard to the above have been very carefully considered. The Tribunal in the case of the assessee for the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e decision of the Tribunal in J.B. Boda & Co. P. Ltd.'s case of June 1994 refers to the decision of the Supreme Court in Continental Construction Ltd.'s case, but does not refer to the provisions of section 80AP. It referred to the earlier decision in the case of J.B. Boda & Co. P. Ltd., the decision of the Supreme Court in Distributors (Baroda) P. Ltd.'s case and to the decision of the Tribunal in Expo Machinery Ltd. v. IAC [1989] 31 ITD 41, which was concerned with the deduction under sections 80HHA and 80HHB and held that section 80AB was inapplicable for calculating deductions under sections 80HHA & 80HHB. Section 80-O states ---- where the gross total income of an assessee being an Indian company... includes any income by way of royalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said amounts is less than 50 per cent of the profits and gains referred to in sub-section (1), the deduction under that sub-section shall be limited to the amount so credited in pursuance of clause (ii) or the amount so brought into India in pursuance of clause (iii), whichever is less. The reading of section 80-O suggests that the gross total income of the assessee should include income for which deduction is allowable under section 80-O. The said income must be received in convertible foreign exchange in India and the amount of deduction is to the extent of 50 per cent of the income received in India. This indicates that the term "income" is with reference to the income that is included in the gross total income and not necessaril ..... X X X X Extracts X X X X X X X X Extracts X X X X
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