COMMISSIONER OF INCOME TAX PONDICHERRY Vs. KHURSHEED ANWAR DOLPHIN HOUSE 236 MISSION STREET PONDICHERRY

JUDGEMENT

(1.) THIS Tax Case Appeal is at the instance of the revenue questioning the order of the Income Tax Appellante Tribunal Madras 'B' Bench made in ITA No.368/Mds/99 dated 31.10.2003 for the assessment year 1996 -97.

(2.) THE respondent -assessee filed his return of income for the assessment year 1996 -97 admitting a total income of Rs.74,620/ -. He also filed another return of income for the above assessment year admitting the same total income of Rs.74,620/ - and along with the said return, the assessee also enclosed proof for commission received in foreign currency in support of his claim for deduction under Section 80 -O of the Income Tax Act. The return was processed under Section 143(1)(a). As the assessee had admitted service charges of Rs.1,000/ - and claimed huge expenses amounting to Rs.1,76,242/ - resulting in net loss of Rs.1,75,242/ -, he was asked to explain the reasons for claiming such huge expenses against the service charges of Rs.1,000/ - received in India. Apart from the above, the assessee was asked to explain as to the nature of commission received to examine the admissibility of the deduction claimed under Section 80 -O of the Act. The assessee explained by stating that the expenses included a sum of Rs.52,500/ - towards interest payment on loan taken for the purchase of a property at Romain Rollan Street, Pondicherry and a flat at Bangalore during the assessment year 1992 -93, a sum of Rs.40,339/ - towards depreciation on building and a sum of Rs.8,000/ - towards depreciation on dish antenna. After considering the explanation of the assessee, the Assessing Officer disallowed the claim of interest and the depreciation claimed on dish antenna on the ground that they do not relate to the business, but allowed 25% depreciation on building. As regards the claim of deduction under Section 80 -O of the Act, the Assessing Officer held that the same is inadmissible. Questioning the said assessment, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals) and the said appeal was also dismissed. The assessee again filed an appeal before the Income Tax Appellate Tribunal, Chennai 'B' Bench. By the impugned order dated 31.10.2003, the Tribunal allowed the appeal in part and directed the Assessing Officer to allow the interest claim of Rs.52,500/ -, to allow 50% depreciation on building and the claim of deduction under Section 80 -O in favour of the assessee, but disallowed the claim of depreciation on dish antenna. Aggrieved by the above order of the Tribunal, the present appeal has been filed by the revenue on the following substantial questions of law: - -

(3.) SO far as the second question of law is concerned, it appears that the assessee had claimed deduction under Section 80 -O of the Act on the commission received in foreign currency from M/s Baggio Tecnologie s.r.l., Italy on the basis that an exclusive agency agreement entered into by the assessee with the said foreign enterprise for promoting and concluding sales contract in the territory of India.