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01-03-2019, Gopinath Muthukad, Section 80AB, 263, Tribunal Cochin

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2 months 1 week ago #8749 by amit
Section - 80AB, 263, 80, 10A
Order Date - 01-03-2019
Favouring - Revenue
Court - Tribunal Cochin
Appellant - ITO
Respondent - Gopinath Muthukad
Citation - 319Taxpundit189
Appeal No. - I.T.A. No.349/Coch/2009
Asstt. Year - 2003-04



This appeal filed by the Revenue is directed against the order of the CIT(A), Trivandrum dated and pertain to the assessment year 2003-04. The assessee has filed Cross Objection in C.O. No. 32/Coch/2009 against the Revenue appeal.

2. The assessee has raised the following grounds:

1. The learned Commissioner of Income-tax (Appeals) erred in deleting the disallowance of deduction u/s 80RR holding that the amount received in foreign currency and brought to India should qualify for deduction and Section 80AB says only about the nature of income that should be considered.

2. The learned Commissioner of Income-tax (Appeals) ought to have taken note of the fact that as per the provisions of Section 80AB deduction u/s 80RR can only be given at 30% of magic profession foreign income included in the gross total income.

3. The learned Commissioner of Income-tax (Appeals) failed to note that deduction under Chapter VIA can be given only in respect of the amount of income of that nature which is included under Gross Total Income.

2.1 The Ld. AR also raised the ground that the Revenue appeal is not maintainable in view of low tax effect.

3. The facts of the case are that the assessee had been carrying on his profession and earning income from India and abroad. The assessment was completed u/s 143(3) disallowing the claim for certain expenditure raised by the assessee.llant. Aggrieved by the said order the assessee already filed an appeal against the above order. Subsequently, the Commissioner of Income tax, Calicut by invoking the provisions of section 263 of the Income tax Act, set aside the assessment order stating that the order passed us 143(3) is erroneous and prejudicial to the interest of Revenue. The Assessing Officer passed the revised order restricting the claim u/s 80 RR of the Act. Aggrieved by the above order of the Assessing Officer, the assessee filed the appeal before the CIT(A).

4. Before the CIT(A) , the Ld. AR submitted that u/s 80RR, deduction in respect of professional income from foreign sources is admissible to the extent of 30% of such income for the assessment year 2003-04. The deduction was allowed for 30% of the foreign income included in the gross total income for the relevant assessment year. The deduction was allowed with reference to the income brought into India by or on behalf of the assessee, in convertible foreign exchange within the per od allowed under the section. He also submitted that in the case of the assessee, the professional income from foreign sources, which was brought into India in convertible foreign exchange for the assessment year 2003-04 was Rs. 14,98,589/- and this amount was included in the gross total income of the assessee for AY 2003-04. Therefore, in accordance with the provisions of section 80 RR, 30% of Rs. 14,98,589/- amounting to Rs. 4,49,577/- was admissible as deduction from the gross total income. He further submitted that according to the books of accounts maintained and the income andexpenditure account, the total receipts including the foreign income amounts to Rs. 52,53,803/-. The expenses incurred in India in connection with Indian Operations was Rs.46,85,207/-. Since the entire foreign earnings were net of expenses, the assessee was able to bring the entire income from abroad in convertible foreign exchange.

5. The CIT(A) considered the order of the Hon'ble ITAT, Mumbai Bench in the case of CIT Vs, Anup Jalota relied upon by the assessee. The CIT(A) observed that the issues involved in assessee’ss case and the decision by the ITAT, Mumbai Bench are identical as the assessee had not incurred any expenditure abroad. Hence, the CIT(A) held that deduction u/s 80 RR was allowable on the entire amount brought to India by the assessee in convertible foreign exchange. The CIT(A) observed that the Assessing Officer had passed the assessment order by giving reference to provisions of section 80 AB, as per the directions of the Commissioner of Income tax u/s 263 wherein it was stated that the deduction can only be allowed considering the restriction placed by section 80AB. Section 80 AB reads as under:

" Where any deduction is required to be made or allowed under any section included in this chapter under the heading " C - Deduction in respect of certain income" in respect of any income of the nature specified in that section which is included in the gross total income of the assesses, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provision of this Act (before making any deduction under this chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income. "

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