2008 (8) TMI 781 - AT - Income Tax

Summary

Issues Involved:
1. Disallowance of claim of deduction u/s 80RR for assessment years 1998-99 and 2000-01.
2. Disallowance of Rs. 13,772 out of telephone expenses for assessment year 2000-01.

Summary:

Issue 1: Disallowance of claim of deduction u/s 80RR

The assessee, a chartered accountant specializing in international arbitration and taxation, claimed deduction u/s 80RR for professional fees received in foreign exchange, arguing that his authorship of various commentaries contributed to his professional income. The Assessing Officer rejected the claim, stating that the income must be earned in the capacity of an "author" as specified in the section, not as a chartered accountant. The Commissioner of Income-tax (Appeals) upheld this decision.

The assessee contended that the section merely requires income derived from the exercise of his profession, without specifying the profession. He cited various legal precedents to support his interpretation. However, the Tribunal held that the purpose of section 80RR is to encourage professionals like authors, playwrights, and artists to project their activities outside India. The income must be derived from the specific professions mentioned in the section. Therefore, the income earned by the assessee as a chartered accountant does not qualify for deduction u/s 80RR. The appeal for assessment year 1998-99 was dismissed, and the order of the Commissioner of Income-tax (Appeals) was upheld for assessment year 2000-01.

Issue 2: Disallowance of Rs. 13,772 out of telephone expenses

For the assessment year 2000-01, the Assessing Officer disallowed Rs. 13,772 out of telephone expenses, but later rectified the order and deleted the disallowance. The assessee withdrew the grounds filed before the Commissioner of Income-tax (Appeals) regarding this issue. The Tribunal observed that the rectification by the Assessing Officer rendered the appeal on this issue infructuous. Consequently, the order of addition of Rs. 13,772 confirmed by the Commissioner of Income-tax (Appeals) was deleted, and the appeal of the assessee was allowed on this point.

Conclusion:

The appeal for assessment year 1998-99 was dismissed, and the appeal for assessment year 2000-01 was partly allowed. The order was pronounced on August 29, 2008.