9911796707
TMI Blog1998 (4) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Calibri; mso-hansi-theme-font:minor-latin;} VIMAL GANDHI, VICE-PRESIDENT AND M.V.R. PRASAD, ACCOUNTANT MEMBER For the Appellant : Hero Rai For the Respondent : P.N. Prasad ORDER Per Shri Vimal Gandhi, V.P. - This appeal by the assessee for the assessment year 1992-93 is directed against the order of the CIT revising assessment order dated 14-11-94 under section 263 of the Income-tax Act to reduce deduction allowed under section 80HHC of the I.T. Act. According to the learned CIT, the Assessing Officer excluded 90 per cent of net amount of consultancy fees of ₹ 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s section are to be reduced by 90 per cent of any sum referred to in the three clauses of section 28 or of any receipts by way of brokerage, commission, etc. as provided in item (1) referred to above. It is the case of the learned CIT that while making 90 per cent of deduction of consultancy fees, the Assessing Officer took into account amount of 1,78,528 whereas he should have taken net amount of 6,84,972. In other words, the commission paid for earning commission was not to be deducted. 3. Shri Hero Rai, the learned Advocate of the assessee, vehemently argued that for purposes of above section, what was to be deducted was "net amount of receipt" and not "gross amount". He cited and relied upon the decision of the Hon' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fession are required to be reduced by 90 per cent of receipts mentioned in the clause and included in "such profits", i.e., profits and gains of business. Thus, receipts to be deducted are controlled by the words "included in such profits" and the matter is to be resolved by looking at the receipt which is included in the "profits and gains of business". In a case where the receipt included in the computed profit is clear and there is no dispute about the receipt or the expenditure claimed against such a receipt, the particular quantum included in "such profit" has to be taken into account. This figure cannot be different from the one included in "such profit". This proposition is supported ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be taken into account and net income is to be determined. For determining such net income different formulae like proportionate receipt, etc. were suggested. In order to override such a situation, the Legislature has laid down a formula uniformly applicable. Thus, where expenditure against type of receipts is not available, 90% of such a receipt is to be deducted for determining profits of business. Having regard to the purpose, setting and language of the statutory provision, there is no justification to hold that first net receipt included in the profit of business be estimated (determined) and thereafter 90% of the same should be deducted from the computed profits of business. The Legislature has laid down that 90% of receipt is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounting to ₹ 5,06,403. In the assessment and in the computation of business profit, the expenditure specifically claimed against the receipt have been allowed and net amount of consultancy fee assessed is ₹ 1,78,528. Thus, when net amount of receipt included in the profits and gains of business is available, there is no question of going to the figure of gross amount of consultancy receipt. The case falls in category (1) discussed above. The Assessing Officer was right in deducting 90 per cent of above receipt out of business income and not the gross receipt as held by the learned CIT in the impugned order. Therefore, there was no error in the assessment order envisaged under section 263 of the Income-tax Act. The learned CIT w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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