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TMI Blog2003 (4) TMI 226X X X X Extracts X X X X X X X X Extracts X X X X ..... applying Rule 115 of the Income-tax Rules, 1962 and grossing up the income by the amount of tax paid by the Indian Collaborators of per section 195A of the Act is not justified. He further erred in holding that addl. Tax under section 143(1A)(a) was not chargeable. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in holding that the income-tax paid by the Indian Collaborators are exempt under section 10(6A) of the Income-tax Act." 3. Briefly, the material facts. The income-tax return filed by the assessee for the assessment year 1990-91, disclosing the income at Rs. 7,51,63,010, was processed and duly accepted by the Assessing Officer under section 143(1)(a) of the Income-tax Act, 1961, on 27th Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be applied in the case of the appellant who is in the jurisdiction of Bombay High Court. Therefore, the issue has become highly debatable as to whether the foreign currency should be converted into Indian Rupees as on the date of the last accounting year or at the time of receipt. Since the issue is debatable, the Assessing Officer cannot make prima facie adjustment by converting foreign currency into Indian Rupees at the exchange rate as on the last day of the previous year. The Assessing Officer's action under section 154 is, therefore, not correct. Secondly, since the income-tax paid by the Indian collaborators are exempt under section 10(6A), the Assessing Officer is not justified in grossing up the income under section 143(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee and the foreign exchange rate prevailing at the time of the remittance, in our considered view, have no material impact on the rate at which such foreign exchange earning are to be converted into Indian rupees for the purpose of taxability in India. 6. We find that the case before us pertains to proceedings under section 154 r.w.s. 143(l)(a) and therefore, limited issue that we are at liberty to address is whether, within narrow confines of these two legal provisions, the impugned addition can be justified. It is obvious that whatever cannot be done under section 143(l)(a), it can also not be done under section 154 r.w.s. 143(l)(a). In this backdrop, we deem it necessary to address ourselves to a very fundamental question i.e., whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructions of the Board were to the effect that no disallowance should be made of items on which two opinions are possible. The matter has been further considered by the Board in the light of the recommendations of the "Tax Reforms Committee" headed by Prof. Raja J. Chelliah and it has been decided that prima facie disallowances shall be made only in respect of following types of claims: (a) an incorrect claim, if such incorrect claim is apparent from the existence of other information in the return or the accompanying accounts or documents. Example: If a deduction has been claimed under the head Capital Gains under section 54F, and if there is information in the return of income or accompanying accounts or documents to show that the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant to application of the statutory limit appear in the return or the accompanying document or documents. Example: (i) If under section 24(1)(i) the deduction in respect of repairs and collection charges is claimed in excess of one-fifth of annual value (applicable with effect from the assessment year 1993-94), such excess can be disallowed as a prima facie adjustment. (ii) If the rebate on contribution eligible under section 88 is claimed in excess of 20% of such contribution, the excess can be disallowed, provided there is indication of the total amount of such contribution in the return or the accompanying document or documents. (d) any other claim which is patently inadmissible in law. Example: Deductions of items like ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of adjustments and outside the arithmetical corrections, is outside the scope of section 143(l)(a). As to whether the impugned adjustment was warranted on the facts and circumstances of the case, on merits, we may only mention that such an adjustment, whether justified on merits or not, was outside the scope of section 143(l)(a). To us, there appears no justification to depart from normal rule of construction according to which the intention of Legislature is primarily to be gathered from the words used in the statute. It will be well to recall the words of Rowlatt, J. in Cape Brandy Syndicate v. Inland Revenue Commissioners [1921] 1 KB 64 (KB) at page 71, that: "...in a taxing Act one has to look at merely what is clearly said. There is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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