Commissioner of Income Tax vs Apurba Mukherjee

Suhas Chandra Sen, J.—The following question of law has been referred to this Court by the Tribunal u/s 256(1) of the income tax Act, 1961 (''the Act''): Whether, on the facts and in the circumstances of the case, and having regard to the correct interpretation of the words ''in this behalf appearing in section 80RRA(3)(ii) of the income tax Act, 1961, the Tribunal was justified in holding that the assessee was entitled to deduction u/s 80RRA of the income tax Act, 1961, on the basis of a certificate issued by the Shipping Master, Calcutta who was neither an authority prescribed under the income tax Act nor represented the Central Government for the purpose of granting approval to the terms and conditions of the assessee''s service outside India in terms of section 80RRA of the income tax Act ?

The year of assessment is 1976-77 for which the relevant period of account is the financial year ending on 31-3-1976.

Nobody appeared on behalf of the assessee on the last occasion when the matter was called for hearing. The reference was'' adjourned and direction was given to the Central Government to serve a fresh notice upon the assessee, but nobody on behalf of the assessee has appeared even to day.

The facts of the case, as narrated by the Tribunal in the statement of case, are as under:

The assessee is an individual. During the course of assessment proceedings it was stated that the assessee was a Marine Engineer and had earned the salary declared in the return of Income from a foreign employer for services rendered by him outside India, and therefore, deduction in terms of the provisions of section 80RRA of the Act was admissible in his case. The claim of the assessee was rejected by the ITO as no certificate by the Central Government approving his services was produced.

On appeal, the assessee filed before the AAC a certificate dated 20-7-1976 issued by the Shipping Master, Calcutta, Ministry of Shipping & Transport, Government of India, the relevant extracts from which are given below:

It is further certified that when Bank Line Ltd. of 21, Bury Street, London, engaged Shri Apurba Mukherjee, he was signed on the Indian Articles of Agreement opened in the Shipping Office, Calcutta.

It is also certified that the articles of agreement is a form of contract of service entered into between the Master of the vessel and the individual officer/seaman concerned which is witnessed by the undersigned as the Shipping Master for the Port of Calcutta, i.e., the ''proper authority''. The form and stipulation in articles of agreement signed by Shri Apurba Mukherjee are as per the Merchant Shipping Act, 1958 and, therefore, deemed to be duly approved by the Government of India.

On the basis of this certificate it was submitted that the services of the assessee were approved by the Government and, therefore, deduction claimed by the assessee ought to have been allowed by the ITO. The submission of the assessee was rejected by the AAC who observed that the term ''prescribed authority'' was not defined in the Act. The AAC took the view that the assessee had not been able to establish that his services had been approved by the Central Government and, therefore, the question of allowing deduction u/s 80RRA did not arise.

Being aggrieved, the assessee came up in appeal before the Tribunal. The Tribunal allowed the assessee''s appeal by observing as under:

A perusal of the order of AAC would show that the assessee had furnished before him a certificate issued by the Shipping Master, Calcutta, Ministry of Shipping &Transport, stating that the services of the assessee had duly been approved by him on behalf of the Central Government. A copy of the said certificate is placed on record. In accordance with the provisions of section 11(1) of the Merchant Shipping Act, 1958, the Central Government may by notification in the Official Gazette, establish a shipping office at every port in India in which it thinks it necessary to do, and shall appoint thereto a Shipping Master and as many Deputy Shipping Masters and Assistant Shipping Masters as it may consider necessary. Section 11(2) of that Act also has defined the exercise and powers of Shipping Masters etc., for discharging their duties subject to general control of the Central Government. In view of this fact I am of the opinion that the AAC was wrong in coming to the conclusion that the prescribed authority has not been defined in the Merchant Shipping Act. 1958 and that the assessee could not establish that his service was approved by the Central Government. On a perusal of the above certificate and after going through the relevant provisions of the Merchant Shipping Act, 1958, I am satisfied that the assessee was entitled to the deduction u/s 80RRA of the Act. I, therefore, direct the ITO to allow the aforesaid claim of the assessee.

We have heard Mr. Prasad. His main contention is that the Shipping Master, Calcutta, was not duly authorised agent of the Central Government to grant approval to the agreement in respect of the assessee''s service outside India under the provisions of the Act. It has been contended that the assessee had not been employed either by the Central Government or the State Government and that the terms of his service had not been sponsored by the Central Government and, therefore, the assessee cannot get any relief in terms of the provisions of section 80RRA(3)(ii). According to Mr. Prasad, the assessee did not fulfil the requirements of this section because the terms and conditions of the service of the assessee outside India had not been approved by a prescribed authority, it was contended that the Shipping Master was not a prescribed authority.

No material has, however, been produced in support of this contention. The Tribunal''s finding that the Shipping Master was the duly authorised agent has not been challenged on the ground of perversity.

Under the circumstances, we are of the view that the Tribunal has taken correct view of the matter.

Accordingly, the question is answered in the affirmative and in favour of the assessee. There will be no order as to costs.

Bhagabati Prasad Banerjee, J.

I agree.