1990 (8) TMI 10 - HC - Income Tax

Summary

Issues:
1. Allowability of loss incurred due to fluctuation of exchange rates in remittance of profits.
2. Allowability of surtax liability as a deduction in income-tax assessment.
3. Allowability of deduction under section 80G from income from tea business.

Analysis:
1. The first issue revolves around the claim of a loss incurred by the assessee due to fluctuation of exchange rates in remittance of profits. The court referred to a previous case where a similar loss was disallowed as a business expenditure. However, the court distinguished the current case by emphasizing that the remittance was for the purpose of distributing dividends, constituting a legitimate business expenditure. The court relied on precedents and concluded that the loss was incurred in carrying on the business, making it an allowable deduction in the income-tax assessment.

2. The second issue pertains to the surtax liability under the Companies (Profits) Surtax Act, 1964, as a deductible expense. The court quickly disposed of this issue by referencing a prior decision that settled the matter in favor of the Revenue and against the assessee, based on established legal principles.

3. The final issue involves the deduction under section 80G from the income of the tea business. The Commissioner (Appeals) had allowed the deduction from the gross total income, but the assessee contended that it should be allowed only from the income assessable under the Income-tax Act. The court analyzed the relevant provisions and circulars, concluding that the deduction under section 80G should be allowed from the income computed for the purpose of assessment under the Income-tax Act, not from the gross total income. The court clarified the correct interpretation and ruled in favor of the assessee on this issue.

In conclusion, the judgment addressed the issues of loss deduction due to exchange rate fluctuation, surtax liability deduction, and section 80G deduction comprehensively, providing clarity on each matter based on legal precedents and statutory provisions. The court's analysis and reasoning in each issue were meticulous, resulting in a well-reasoned judgment.