2001 (3) TMI 814 - AT - Income Tax

Summary

Issues: Interpretation of deduction under section 80RR on foreign receipts

Comprehensive Analysis:

Issue 1: Interpretation of deduction under section 80RR
The appeal filed by the revenue challenged the order of the Commissioner of Income-tax (Appeals) regarding the deduction under section 80RR on earnings in foreign exchange. The Assessing Officer contended that the deduction under section 80RR is applicable to income derived by the assessee in exercising their profession outside India, not on the gross receipts in foreign exchange. The Commissioner of Income-tax (Appeals) directed the Assessing Officer to reconsider the matter based on the interpretation that if the entire foreign receipts are brought into India in foreign exchange, the deduction available would be 25 per cent of that amount. The Tribunal noted that the matter was previously decided in favor of the assessee for the assessment year 1987-88, where it was established that the deduction under section 80RR is allowable on the entire amount brought into India by the assessee in convertible foreign exchange, even if no expenditure was incurred abroad.

Issue 2: Application of Tribunal's precedent
The Departmental Representative argued that the Tribunal's orders for the assessment years 1986-87 and 1987-88, which favored the assessee, should not be relied upon in the current case as the claim was partly disallowed by the Assessing Officer in the original assessment. However, the Tribunal found that the current case was consistent with the view taken in the preceding year, where the assessee had not incurred any expenditure abroad, leading to the decision that the claim of the assessee deserves to be accepted. The Tribunal emphasized that the deduction under section 80RR should be allowed on the entire amount brought into India in convertible foreign exchange, irrespective of whether any expenditure was incurred abroad.

Final Decision:
After considering the submissions and the facts of the case, the Tribunal upheld the order of the Commissioner of Income-tax (Appeals) and dismissed the appeal filed by the Revenue. The Tribunal reiterated that the deduction under section 80RR should be granted on the total amount brought into India in foreign exchange, following the precedent set in previous years where no expenditure was incurred abroad by the assessee.