COMMISSIONER OF INCOME-TAX Vs. SITALDAS GYANCHAND

JUDGEMENT

(1.) BY this reference under Section 256 (1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), the Income-tax Appellate Tribunal, Indore Bench, has referred to this court the following question of law for its opinion :

(2.) THE material facts giving rise to this application, briefly, are as follows: The assessee is an individual. In the return of income filed by the assessee for the assessment year 1978-79, the assessee claimed deduction under Section 80rra of the Act on the ground that in the relevant accounting year, the assessee, who was a technician, had received remuneration from a company. The Income-tax Officer rejected that claim. The appeal preferred by the assessee before the Appellate Assistant Commissioner was dismissed. On further appeal, the Tribunal observed that the assessee had left the country with a valid passport issued by the Government of India ; that the assessee was a technician ; that the assessee had worked in Riyadh, a foreign country for 22 months ; that he had received remuneration in foreign currency and that the only objection to accepting the claim of the assessee for deduction under Section 80rra of the Act was that he had failed to produce approval of the authority, as required by Clause (ii) of Sub-section (2) of Section 80rra of the Act. The Tribunal held that mere non-production of the certificate showing approval by the prescribed authority would not disentitle the assessee to claim deduction under Section 80rra of the Act. In this view of the matter, the Tribunal allowed the appeal and upheld the claim of the assessee. Hence, at the instance of the Department, the aforesaid question of law has been referred to this court for its opinion.

(3.) HAVING heard learned counsel for the parties, we have come to the conclusion that this reference must be answered in the negative and against the assessee. Sub-section (2) of Section 80rra of the Act provides that deduction under that section would be allowed in the case of an individual, who is a technician, if the terms and conditions of his services outside India are approved in that behalf by the Central Government or by the prescribed authority. There was no such approval on record and yet the Tribunal held that absence of approval, as required by Clause (ii) of Sub-section (2) of Section 80rra of the Act did not disentitle the assessee from claiming deduction under Section 80rra. The Tribunal was not justified in arriving at this finding. The learned counsel for the assessee contended that an application was submitted by the assessee to the Central Government for approval. But a request seeking approval cannot take the place of approval. It was also contended that there was no authority prescribed under the relevant provision. However, in the absence of any prescribed authority, the assessee has to seek, as required by Section 80rra (2) (ii) of the Act, approval of the Central Government to the terms and conditions of his services outside India. The Tribunal, therefore, was not right in holding that the conditions prescribed by Clause (ii) of Sub-section (2) of Section 80rra of the Act for claiming deduction under that provision were fulfilled.