9911796707
TMI Blog1984 (7) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,66,077. On appeal, the Commissioner (Appeals) upheld the same. Against the same, the assessee has preferred this appeal. 2. The learned counsel for the assessee strongly urged that if the gross total income includes any income by way of royalty, commission or fees, then the assessee is entitled for deduction under section 80MM from such income of an amount equal to 40 per cent. The deduction contemplated is such category of income but not against quantum of income. The deduction allowable is an amount equal to 40 per cent of the gross royalty or commission. The carry forward losses and depreciation should not be deducted before allowing the deduction under section 80MM. He placed reliance on various decisions, particularly, the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plated under the above provision. If that category of income forms part of the total income, then section 80MM is attracted and deduction is allowable at 40 per cent on the gross receipts. Under section 80B(5) of the Act 'gross total income' means total income computed in accordance with the provisions of the Act before making any deduction under Chapter VIA or under section 80-O. Sub-section (2) of section 80A of the Act provides that the aggregate amount of deduction required to be made under Chapter VIA shall not exceed the gross total income of the assessee. The expression 'gross total income' in section 80B(5) is relevant only for the purpose of finding out whether the gross total income includes any income of the category mentioned in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hole or 60 per cent of 'such income'. Now, if the words 'where the gross total income of the assessee... includes any income by way of dividends from a domestic company' in the opening part of the section refer only to the inclusion of the category of the income denoted by the words 'income by way of dividends from a domestic company, and not to the quantum of the income so included, the words 'such income' cannot have reference to the quantum of the income included, but they must be held referable only to the category of the income included, that is, income by way of dividends from a domestic company. The words 'such income' as a matter of plain grammar must be substituted by the words 'income by way of dividends from a domestic company' i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in respect of the income computed after making the deductions provided under the Act. The above ratio squarely applies to the instant case. 7. In Addl. CIT v. Isthmian India Maritime (P.) Ltd. [1978] 113 ITR 570, the Madras High Court considered the question whether the deduction in respect of the fees received by the assessee from a foreign company should be calculated at 60 per cent of the gross fees received by the assessee under section 80-O. The above question was answered in the affirmative. The Madras High Court held that what is to be taken into account for the purpose of working out the deduction in respect of royalties from foreign enterprises under section 80-O is the amount actually received by the assessee and not the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erable to the activities mentioned by section 80P(2)(c) of the Act, the assessee would be eligible for the deduction and it is only if there is any amount left thereafter that could be the subject of consideration for set off of carried forward losses or depreciation. In this decision also both the decisions of the Supreme Court in Cloth Traders (P.) Ltd.'s case as well as Cambay Electric Supply Industrial Co. Ltd.'s case were considered. 11. In Bharat Foam Industries (P.) Ltd. v. ITO [1981] 11 TTJ 212, the Ahmedabad Bench 'A' of the Tribunal has held that deduction under section 80HH of the Act was allowable out of the gross total income without setting off the same against brought forward loss and unabsorbed depreciation. The ratio laid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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