2012 (7) TMI 176 - AT - Income Tax

Deduction u/s. 80-O - principles of consistency - order of the ld. CIT(A) for the assessment year 1997-98, directed that the proportionate amount of Indian salaries from income of the three Chartered Accountants received during the period of absence from India should be treated as direct expenditure against the income from the foreign currency received assessee contesting contrary decision given in relevant year Held that - finding of the ld. CIT(A) for the assessment year 1997-98 has been accepted and the finding therein is a point of fact and a fundamental one at that, such a finding would have to be held to be applicable for the assessment year 1993-94 also - Principles of natural justice demand that a factual finding given by the ld. CIT(A) is liable to be followed for the assessment year 1993-94 also - Following the decision in the case of Radhasoami Satsang (supra) and applying the principles of consistency as explained therein, this issue is restored to the file of the AO with a categorical direction that when computing the deduction under section 80-O, the AO shall follow the same method as prescribed by the ld. CIT(A) for the assessment year 1997-98 in the assessee s own case referred to supra - order of the ld. CIT(A) stands set aside and the issue is restored to the file of the AO - Ground of the assessee is allowed - Assessee is partly allowed.

Summary

Issues:
1. Jurisdiction of reassessment under Section 147 of the Income Tax Act.
2. Computation of deduction under section 80-O for a partnership firm engaged in the profession of Chartered Accountants.

Analysis:
1. Jurisdiction of reassessment under Section 147:
The appeal was filed against the order of the Ld. CIT(A)- XXIV, Kolkata for the assessment year 1993-94. The assessee raised grounds challenging the jurisdiction of the reassessment under Section 147 of the Income Tax Act. However, during the hearing, the assessee's counsel chose not to press these grounds related to the technicality of the reopening. Consequently, ground nos. 1 to 3 were dismissed as not pressed.

2. Computation of deduction under section 80-O:
The issue revolved around the computation of deduction under section 80-O for a partnership firm of Chartered Accountants with foreign remittance income. The contention was that the deduction under section 80-O should be granted on net income rather than gross income, as directed by the ld. CIT(A) for the assessment year 1997-98 in a previous case. The argument was based on the proportionate disallowance of Indian expenditure incurred in earning foreign income. The Tribunal noted that the ld. CIT(A)'s decision for the assessment year 1997-98 had been accepted by the revenue, and the facts were identical for the relevant assessment year. Citing the decision of the Hon'ble Supreme Court in Radhasoami Satsang case, the Tribunal held that a factual finding accepted in a previous year should be followed for consistency unless challenged. Therefore, the Tribunal set aside the ld. CIT(A)'s order and directed the AO to compute the deduction under section 80-O following the method prescribed for the assessment year 1997-98. As a result, the ground related to the computation of deduction under section 80-O was allowed, and the appeal was partly allowed.

In conclusion, the Tribunal addressed the issues of jurisdiction under Section 147 and the computation of deduction under section 80-O in a detailed manner, providing a thorough analysis based on legal precedents and factual findings. The decision highlighted the importance of consistency in applying legal principles across assessment years and upheld the principles of natural justice in rendering its judgment.