ORDER
O.K. Narayanan, Accountant Member
1. This appeal is filed by the Assessee for the Asst. Year 1998-99. The appeal is filed against the order of the CIT(A)-XXIII at Mumbai dated 19-5-2000 and arises out of the assessment completed Under Section 143(3) of the Income-tax Act, 1961.
2. The first issue raised in this appeal is that the CIT(A) has erred in confirming the deduction Under Section 80RRA of the Income-tax Act, 1961, at 75 per cent of the net remuneration of Rs. 96,143 after deducting total expenses incurred from the gross remuneration received from M/s. Citizen Watch Co. Ltd. Hongkong.
3. The Assessee having received remuneration for services rendered outside India had claimed the deduction available Under Section 80RRA. The Assessing Officer while computing the deduction adjusted the expenditure incurred by the Assessee against the receipt of remuneration and only the net of the remuneration was considered. This was confirmed by the CIT(A), against which the present appeal is before us.
4. The learned Counsel appearing for the Appellant Assessee contended that the concept of “net amount” is not applicable to the deduction envisaged Under Section 80RRA. The learned Counsel stated that this is because of the fundamental distinction between the concept of receipt Under Section 80RRA and receipts under the provisions of Section 80-O and the like. The learned Counsel pointed out that in the case of deductions coming Under Section 80-O and other similar provisions, the deduction is available to the “income” accrued to the Assessee under specified circumstances and included in his gross total income. The learned Counsel pointed out that as far as Section 80RRA is concerned the deduction is not available on “income” but the deduction is available on “remuneration”. Therefore the speaking distinction between “income” and “remuneration” needs to be understood in the light of correct legal perspective. If so understood, there is no question of any netting, while computing deduction available Under Section 80RRA.
5. The learned Counsel explained before us the true meaning of the word “remuneration” as found in various authorities. According to Oxford Reference English, the term “remuneration” means the reward or pay for services rendered. As per Black’s Law Dictionary (7th Edition), the term “remuneration” means the payment or compensation. According to Merriam Webster’s Collegiate Dictionary (10th Edition), “remuneration” means payment or equivalent for services. Aiyar’s Judicial Dictionary explains the word “remuneration” as consideration for services rendered. The learned Counsel therefore submitted that there is no concept of Income and expenditure imputed in the word “remuneration”. Income is the one to be computed by setting of the relevant expenditure against relevant receipts. Remuneration is the compensation paid for services rendered for which there is no need of setting off of accounts inter se.
6. The learned Counsel in this context placed reliance on the Circular issued by CBDT wherein the intended purposes of Section 80RRA as introduced by Finance Act, 1975 are explained (Circular No. 169 dated 23-6-1975 – Taxman’s Direct Tax Circular with Judicial Analysis -Volume 4 Edition 1999 page 2.646).
7. The learned D.R. on the other hand submitted that the CIT(A) has discussed the matter in a very detailed manner on the basis of relevant case laws and has come to a judicious finding that the expenditure incurred by the Assessee for earning remuneration needs to be set off and the net amount alone needs to be considered for the purpose of Section 80RRA. The learned D.R. further submitted that various other Sections like 80-O are analogous in nature and therefore the judicial pronouncements delivered on the provisions like Section 80-O apply mutatis mutandis to Section 80RRA also. He further submitted that the provisions of Section 80RRA cannot override the provisions of Section 80AB and therefore what is to be considered for the purpose of deduction is the gross remuneration minus the relevant expenses. He supported the orders of the lower authorities.
8. We heard the matter in detail. It is to be understood that the language of the provisions of law in Sections 80-O and 80RRA are different. The deduction available Under Section 80-O and other analogous provisions are on the “income” from specified sources and included in the gross total income of the Assessee. On the other hand, the deduction is available Under Section 80RRA on the “remuneration” received by specified technicians. As rightly understood, remuneration is the compensation paid for services rendered. There is no concept of adjusting expenditure against such remuneration. Remuneration is not in the nature of business receipts. The setting off of expenditure against receipt is necessary where the income is required to be computed. In the case of remuneration there is no cause for any such computation. This is because the remuneration is always predetermined on the basis of the terms of service contract. The computation of remuneration is not dependent on the turnover or price level etc. as in the case of business profit. The remuneration is fixed either on time basis or on piece basis. It is to be seen that remuneration is always predetermined. Therefore the concept of netting cannot be deployed while working out the deduction in the context of remuneration.
9. We therefore accept the contention of the Assessee and allow the ground raised by the Assessee. We direct the Assessing Officer not to deduct any expenditure from the remuneration included in the course of total income of the Assessee and give the deduction on the whole of the remuneration as such.
10. The learned Counsel has raised an alternate ground that if at all expenses are to be deducted from the gross remuneration, the deduction may be confined to such direct expenditure attributable to earning of remuneration. If deduction of expenses is called for, then this contention of the Assessee is accepted. Every kind of expenditure cannot be deducted from the remuneration received by the Assessee. Only those expenditure which have direct nexus with earning of remuneration alone can be deducted. But in this case as we have already allowed the main ground raised by the Assessee, this finding becomes academic.
11. The next ground raised by the Assessee is that the CIT(A) has erred in confirming the disallowance for expenses on telephone, motor car and motor car depreciation amounting to Rs. 30,105 by treating them as personal in nature.
12. We considered the matter. With reference to the disallowance of expenses on telephone and motor car maintenance, we do not find much force in the contentions advanced by the Assessee. Therefore those disallowances are confirmed.
13. But as far as me depreciation is concerned there is no justification in making any disallowance. If the car is used by the Assessee for the purpose of his business, then the depreciation need to be allowed as per the rate suggested by the statute. Depreciation is a statutory allowance. The statutory allowance cannot be restricted on the basis of the volume of business use and volume of personal use. The condition to be satisfied is that the asset should be owned by the Assessee and it should be used for the business or profession. Both the conditions are satisfied here. Personal use of the car cannot fetter the granting of statutory allowance. Therefore the disallowance made on account of depreciation is deleted.
14. In result this appeal filed by the Assessee is partly allowed. Order accordingly.
