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Issues:
1. Interpretation of Section 85C of the Income-tax Act of 1961 regarding the eligibility of the assessee for relief on the gross amount received from a foreign company. 2. Determination of whether the expenses incurred by the assessee should be deducted from the gross amount received for the purpose of granting relief under Section 85C. 3. Comparison of the present case with a Supreme Court decision regarding the interpretation of a similar provision under Section 80E of the Income-tax Act. Detailed Analysis: 1. The judgment pertains to a reference under Section 256(1) of the Income-tax Act, concerning the eligibility of the assessee for relief under Section 85C. The assessee, a public limited company, received a sum from a Libyan company for technical services. The dispute arose regarding whether the assessee should be granted relief under Section 85C on the gross amount received without deducting the expenses incurred. The Tribunal initially granted relief only on the balance after deducting expenses, but the High Court analyzed the provisions of Section 85C to determine that relief should be based on the total income without deducting expenses. 2. The court examined the language of Section 85C, emphasizing that relief is based on the income by way of royalty or technical services included in the total income. The court clarified that the computation of income after deductions is distinct from determining the income included for relief purposes. It was noted that the plain language of the provision focuses on the income accruing or received for technical services, which in this case was the entire amount received from the foreign company. The court rejected the argument that only the net amount after deducting expenses should be considered for relief under Section 85C. 3. The judgment also referenced a Supreme Court decision related to Section 80E of the Income-tax Act, which dealt with a similar issue of deductions from income for relief calculation. The Supreme Court decision highlighted the importance of considering the net amount for relief calculations based on the language of the specific provision. However, the High Court differentiated the present case under Section 85C, emphasizing that the amount received by the assessee from the foreign company constituted the income included for relief eligibility, irrespective of any deductions made. The court concluded that the assessee was entitled to relief under Section 85C based on the gross amount received, and not a reduced amount after deducting expenses. In conclusion, the High Court ruled in favor of the assessee, affirming their eligibility for relief under Section 85C based on the entire gross amount received from the foreign company. The judgment emphasized the importance of interpreting tax provisions based on their specific language and requirements, ensuring that relief calculations align with the statutory framework.
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