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TMI Blog1991 (9) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... e was not entitled to relief under the above section:' . Rs. Gross receipts from abroad included in the Gross Total Income 1,70,18,163 Less: . Amount not remitted to India (Remitted to Japan from Malaysia for PTSB Inspection Job) 3,79,458 Gross amount qualifying for deduction under s. 80-O 1,66,38,705 Less: . i. Direct expenses on jobs 57,92,470 ii. Proportionate Indirect Expenses 1,15,25,187 Since expenses are more than the receipts no deduction under s. 80-O is allowable for this assessment year. 1,73,17,657 3. Being aggrieved, the assessee challenged the above disallowance before the CIT(A). The first contention advanced in appeal was that the Assessing Officer was not right in not taking into account the sum of Rs. 3,79,458 as receipts from abroad because such receipts from Malaysia being remitted to Japan had also to be considered to be eligible for deduction under s. 80-O of the Act in terms of Explanation to the above section r/w s. 80N. The CIT(A) found the contention acceptable subject to verification of the relevant facts. The Revenue in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the total income. 6. We have carefully considered the rival submissions of the parties, facts and circumstances of the case and the material on record. We have also considered the relevant provisions of the Act, and the case law cited before us. At the outset, it is deemed necessary to mention that there is no dispute that the assessee has satisfied all the requirements of s. 80-O and is entitled to deduction under the said provision. Further, the assessee's learned representative conceded that the deduction under the above section is to be allowed on foreign income and not on as gross receipts. In other words, the expenses incurred abroad for earning "such income" referred to in s. 80-O are to be deducted. There is further no dispute that deduction under s. 80-O (aggregated with other deductions under Chapter VIA) can in no case exceed the gross total income. The controversy before us, as noted earlier, is whether the expenses incurred in India are to be taken into account for computing deduction permissible under s. 80-O of the Act. 7. At the time of hearing, our attention was drawn to several high-sounding maxims and rules of interpretation of statute. However, for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cludes any income by way of royalty, commission, fees or any similar payment received by the assessee from the Government of a foreign State or a foreign enterprise in consideration for the use outside India of any patent, invention, model, design, secret formula or process, or similar property right, or information concerning industrial, commercial or scientific knowledge, experience or skill made available or provided to such Government or enterprise by the assessee, or in consideration of technical services rendered or agreed to be rendered outside India to such Government or enterprise by the assessee, under an agreement approved by the board in this behalf, and such income is received in convertible foreign exchange in India, or having been received in convertible foreign exchange outside India, or having been converted into convertible foreign exchange outside India, is brought into India, by or on behalf of the assessee in accordance with any law for the time being in force or regulating payments and dealings in foreign exchange, there shall be allowed, in accordance with and subject to the provisions of this section, a deduction of the whole of the income so received in, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convertible foreign exchange. Thus, even when included in the total income "such income" is discernible, floats separately and cannot be mixed with income or expenditure incurred in India. Thus, the peculiar features of self-contained provisions of s. 80-O and its structure, language and contents make s. 80AB inapplicable for computing the deduction. Even in CBDT Circular No. 281 dt. 22nd Sept., 1980 explaining the scope and effect of newly inserted s. 80AB providing that deduction specified will be calculated with reference to net income, it is accepted that the section is subject, however, to other requirement of respective sections. Thus, requirements of other sections are to be taken into account. The aforesaid view is also supported by the view taken by the Hon'ble Calcutta High Court in the case of CIT vs. Darbhanga Marketing Co. Ltd. (1971) 80 ITR 72 (Cal) and CIT vs. New Great Insurance Co. (1973) 90 ITR 348 (Bom). The aforesaid decisions, as explained by the Calcutta High Court in the case of Pilani Investment Corpn. Ltd. vs. CIT (1986) 55 CTR (Cal) 30 : (1987) 165 ITR 138 (Cal), were not overruled by the Supreme Court in the case of Distributors (Baroda) P. Ltd. vs. Unio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity of being heard to the assessee. We direct accordingly. 11. The next ground of appeal relates to refusal of the CIT(A) to allow investment allowance on computer installed during the previous year. The CIT(A) maintained the order of the Assessing Officer as in his view the computer, though a machine, did not construct, manufacture or produce any article or thing as an industrial undertaking within the meaning of s. 32A of the Act. Shri Syali drew our attention to the order dt. 2nd Nov., 1987 of the CIT(A) in the case of Sriram Fibre Ltd. wherein the learned CIT(A) following the decision of Tribunal Bombay (sic) and Calcutta Benches reported in ITO vs. V.M. Salgaocar Bros. (P) Ltd. (1986) 18 ITD 440 (Bang) and ITO vs. Ganges Printing Co. Ltd. (1986) 24 TTJ (Cal) 404 : (1986) 15 ITD 212 (Cal) agreed that investment allowance was permissible on data processing machine. Shri Sarkar, the learned departmental representative, on the other hand, argued that similar issue stood decided against the assessee in the earlier years. He, therefore, wanted us to maintain the disallowance. 12. We have carefully considered the rival submissions of the parties. As is evident from rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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