Commissioner of Income Tax vs Bharat Overseas Bank Ltd.

R. Jayasimha Babu, J.—The question referred to us for consideration at the instance of the Revenue is, "whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in directing the Assessing Officer to recompute the D. I. T. relief admissible to the assessee on the income derived from the foreign branch at Bangkok without reducing the deduction allowable u/s 35B of the Income Tax Act, 1961 ?". The assessment year is 1984-85.

The assessee is a bank which has a branch at Bangkok, the income from which is eligible for double taxation relief. Its claim that while working out that relief, the deduction allowed to the assessee u/s 35B ought not to have been taken into account was rejected by the Assessing Officer. The Commissioner, however, allowed the claim by following an order which had been made for the assessment years 1977-78 and 1978-79. The Tribunal having agreed with the Commissioner this reference is made at the instance of the Revenue.

The Tribunal as also the Commissioner have completely missed the effect of the change in the law brought about by the Finance Act, 1983, which provided that no deduction u/s 35B shall be allowed in relation to expenditure incurred on or after March 1, 1983. That amendment came into force with effect from April 1, 1983. As the assessment year with which we are concerned is 1984-85, the assessee is not entitled to claim any relief u/s 35B in relation to the expenditure incurred on or after March 1, 1983. The question referred to us is, therefore, answered in favour of the Revenue and against the assessee.