BADAR DURREZ AHMED, J.

( 1 ) THE assessee, a lawyer by profession, filed his return of income on 31. 10. 1995 in respect of assessment year 1995-96. He declared a total income of Rs. 2,05,326/- after claiming a deduction of Rs. 17,05,760/- u/s 80-O being 50% of the gross professional fees received in foreign exchange to the extent of Rs. 34,11,529/ -. In the profit and loss account, the assessee had shown gross professional fees amounting to Rs. 41,46,203/- (including the said gross professional fees received in foreign exchange) and gross interest receipt of Rs. 42,804/ -. The assessee claimed various expenses like salary, travelling expenditure, conveyance and other official expenses and after deducting the same from the gross receipts, the net profit has been shown as Rs. 17,68,707/ -. The Assessing officer processed the return u/s 143 (1) (a) of the income Tax Act, 1961 (hereinafter referred to as the said Act ) and by intimation dated 27. 01. 1997 the total income was computed at Rs. 10,26,740/ -. The Assessing officer had allowed a deduction of only Rs. 8,83,946/- u/s 80-O as against the claim of Rs. 17,05,360/- by the assessee. The assessee had claimed the deduction u/s 80- o in respect of the gross income by way of fees in convertible foreign exchange, whereas the Assessing officer had made the adjustment allowing the deduction against the net income received in convertible foreign exchange.

( 2 ) BEING aggrieved by this action on the part of the Assessing Officer, the assessee had filed an appeal before the Commissioner of Income-Tax (Appeals) challenging the adjustment made by the Assessing Officer as aforesaid. The Commissioner of Income-Tax (Appeals) allowed the appeal of the assessee and cancelled the adjustments holding that:-

WHETHER or not deduction u/s 80-O is admissible with reference to the gross foreign exchange brought into india or the profit included in the gross total income is a debatable question of law on which contrary opinions are conceivable. Adjustment of the returned income on account of the claim of deduction u/s 80-O is, therefore, outside the scope of Section 143 (1) (a ). The returned income is therefore directed to be accepted without the impugned adjustment relating to the claim of deduction u/s 80-O of the Act.

( 3 ) AGAINST this order, the revenue filed an appeal before the Income-Tax Appellate Tribunal and the main issue urged before the Tribunal was whether such an adjustment could be made under the provisions of Section 143 (1) (a) of the Income-Tax Act. It was argued on behalf of the revenue that this court had, in the case of cit v. Marketing Research Corporation: 1987 (61) CTR 204 (Del), held that deduction u/s 80-O was to be computed on the net income and not on the gross receipt of the assessee. It was also submitted that this decision was based on the decision of the Supreme Court in the case of distributors (Baroda) Pvt. Ltd. v. Union of India: 155 itr 120 and that the decision in CIT v. Marketing research (supra) was fully approved and endorsed by a full Bench of this Court in the case of CIT v. Chemical and metallurgical Design Co. Ltd. : 247 ITR 749.

( 4 ) ON the other hand, it was argued on behalf of the assessee that when the assessee filed the return on 31. 10. 1995, the question of deduction being claimed on the basis of gross receipts of foreign exchange or on a net basis was still in the realm of uncertainty and, therefore, no adjustment could be done u/s 143 (1) (a) of the said Act. It was argued that in a decision of the calcutta Bench of the Tribunal in the case of M. N. Dastur and Co. Ltd v. Deputy Commissioner of Income-tax: (1992) 40 itd 521 (Cal.), it had been held that deduction u/s 80-O was to be computed on gross receipts of foreign exchange. Though this decision had been subsequently reversed by the Calcutta High Court, yet, the issue, according to the assessee, was debatable in the year 1995 when the assessee had filed his return.

( 5 ) THE Tribunal conside

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