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TMI Blog2019 (9) TMI 479X X X X Extracts X X X X X X X X Extracts X X X X ..... tions 5, 7 and 8. The other questions are set out below: 1. Whether the Tribunal was justified in holding that for the purpose of entitlement to weighed deduction under Section 36 (1) (ii a) of the Income Tax Act, 1961 the income of employees chargeable under the head 'salaries' before allowance of standard deduction under Section 16 of the Act was to be considered? 2. Whether the Tribunal was justified in holding that loss under Section 32 (1) (iii) of the Act was allowable not in the year in which fixed assets were discarded but only in the year in which they were sold? 3. Whether on the facts and in the circumstances the Tribunal was right in rejecting the assessee's claim that the sum of Rs. 4,25,450 having been estimated as th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al disabilities mentioned in the sub-section. The proviso is very important. It said that this subsection would not apply to an employee whose income "chargeable under the head" "salaries" exceeded Rs. 20,000/- per month. Now, the question is: what is to be taken as the salary - the gross amount or the net after deduction. The case of the revenue is that it is the gross amount whereas the assessee contends that it is only the net amount as mentioned in Section 16 which is relevant. Now, if you compare the language employed in Section 36(1)(iia) proviso, it uses the expression "chargeable under the head salaries" while qualifying salary. Section 16 provides for certain deductions to be made to arrive at the salary "chargeable under the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, the words sold and discarded are disjunctive and denote separate dealing with the above items. Therefore, in my view, the tribunal made an error of law in coming to the conclusion that "there was no evidence to prove that the items claimed to have been discarded and scrapped were actually sold by the assessee." Therefore, this question is also answered in the negative in favour of the assessee and against the revenue. As questions 2 and 3 are related the answer to question 3 is also in the negative in favour of the assessee and against the revenue but with the rider that the veracity of the claim of the assessee is to be established. Questions 4 and 6 relate to interpretation of Section 40A (5) of the said Act which was existing du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re that is referred to therein has to be incurred on the maintenance outside India of a branch, officer or agency for the promotion of sales outside India of the assessee's goods, services or facilities. Therefore, what is requisite is that the assessee should have maintained the branch, officer or agency outside India...............While we think that there is some merit in the observation of the Karnataka High Court that the words "branch, officer or agency" in the clause draw colour from each other and that the word "agency" should, therefore, be interpreted in the light of the words "branch" and "office", it is, in any event, very clear that even if the agency is an agency established not by the assessee but by a third party, the agency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous. I do not hold that the issue itself is answered in favour of the assessee. That would depend on the adjudication by the tribunal on remand, on the basis of my observations above. In those circumstances, those parts of the impugned order of the tribunal relating to the subject-matters covered by questions 1, 2, 3, 4, 6, 9 and 10 are set aside. We direct the tribunal to re-determine these issues in accordance with this judgment and order and to pass a fresh order on hearing the parties and by a reasoned order within six months of communication of this order. This reference application is accordingly disposed of. Certified photocopy of this judgment and order, if applied for, be supplied to the parties upon compliance with all re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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