S.N. Rotho, Accountant Member -
(1.) THIS appeal has been filed by the department against the order dated 23-3-1981 of the Commissioner (Appeals), relating to the assessment year 1976-77, the previous year of which ended on 31-3-1976. The grounds taken in this appeal are as below :
7. The learned Commissioner (Appeals) erred in holding that on the facts and in the circumstances of the case and in law the assessee being a professional is engaged in business and that the assessee is eligible for weighted deduction under Section 35B.
(2.) He further erred in accepting the alternative claim of the assessee that the foreign tour income should be treated as business income and not income from profession and hence entitled to deduction under Section 35B.
2. The assessee is an eminent playback singer in the Film Industry. During the year under consideration, she had been to the USA to give public performances at nine places, in accordance with an agreement dated 11-3-1975 with Image of India, who acted as the agent of the assessee in organising the foreign tour. The tour was conducted on commercial lines, inasmuch as the assessee took the group of artists and other technicians with her and tickets were sold for all the performances. Foreign taxes were paid, profit and loss account was drawn up. The assessee offered the net profit arising out of the tour for tax. In course of the assessment proceedings, the assessee claimed that the expenses incurred by her in earning the aforesaid foreign income should be allowed as deduction. The ITO agreed and allowed the same as deduction and taxed only the net balance. Another claim of the assessee before the ITO was that weighted deduction under Section 35B of the Income-tax Act, 1961 ('the Act') should be allowed on expenses incurred abroad and which fell within various clauses of Section 35B. The ITO rejected the claim of the assessee on the ground that the assessee was engaged in a profession and not in a business and so the assessee was not entitled to the relief under Section 35B. According to the ITO, there should be goods or services or facilities which are capable of being transferred ; otherwise Section 35B does not apply. In the instant case, the ITO held that the assessee had certain personal accomplishments which made her an outstanding playback singer, but those personal accomplishments could not be transferred by her to any other person outside India. In this view of the matter, be held that the provisions of Section 35B did not apply to the facts of the case. Hence, the ITO assessed the foreign income of the assessee under the head 'Income from other sources' and denied the relief under Section 35B on the expenses incurred by her to earn that income.
The assessee appealed to the Commissioner (Appeals), and contended that the action of the ITO was not justified. Reliance was placed on the decision of the Tribunal in Dr. R.H. Dastur v. Third ITO  8 Taxman 165 (Bom.), wherein it has been held that a doctor going abroad to render professional services, actually carries on business and the income so earned by him from abroad is assessable under the head 'Profits and gains of business or profession', and further that the expenses incurred by him qualifies for relief under Section 35B. Reliance was also placed on the decision of the Tribunal in another case, IT Appeal No. 3117 [Bom.] 1979 dated 29-11-1980, wherein it has been held that Section 35B applied even to a chartered accountant, who renders his services abroad. The departmental view that a chartered accountant derives income from profession and so is not entitled to relief under Section 35B has been reversed in this order. The Commissioner (Appeals), following the aforesaid orders of the Tribunal, held that the foreign income of the assessee before us is assessable under the head 'Profits and gains of business or profession', and so the relief under Section 35B on the expenditure incurred to earn that income cannot be denied merely on the ground that the assessee was carrying on a profession and not a business. The Commissioner (Appeals) then considered whether the individual items of expenses, satisfied the tests laid down in the various sub-clauses of Section 35B. He found that the various items, totalling to Rs. 23,19,505 and another sum of Rs 54,000 satisfied all the conditions for the grant of relief under Section 35B and so he directed that relief under Section 35B thereon, should be given. Similarly, he found that another sum of Rs. 44,682 also qualified for relief under Section 35B, and so he directed the ITO to allow the relief thereon.
(3.) SHRI D.R. Chawla, the learned representative for the department, urged before us that the learned Commissioner (Appeals) erred in his decision. At the outset, he fairly stated that the question whether 'profession' is included in the term 'business' or not has been settled by the Supreme Court in the case of Barendra Prasad Ray v. ITO  129 ITR 295. He stated that the Supreme Court has held that all professions are included in the term 'business' and so it is not possible to deny the relief under Section 35B to the assessee, on the ground that she was engaged in a profession, but not in a business. However, he argued that the Commissioner (Appeals) went wrong in saying that the provisions of Section 35B applied to the facts of the case, even assuming that the assessee's income was assessable under the head 'Profits and gains of business or profession', according to SHRI D.R. Chawla, the assessee did not export anything at all, because in order to constitute export, there should be some goods or services which can be parted with by the assessee and received by somebody else. According to him, the assessee should have produced some goods or services which are capable of being transferred to another person, and if that were not possible, there would be no export at all. He laid stress on the dictionary meaning of the words 'deals in' and 'provides' appearing in Section 35B(1)(b)(i), for the proposition that the assessee in the instant case did not produce any goods or services or facilities which she carried with her and parted with the same abroad, by transferring them to some other persons. Further, he urged that even assuming that the assessee was eligible for relief under Section 35B, the Commissioner (Appeals) should have given the ITO a chance to examine whether the conditions laid down in Section 35B are satisfied in respect of the expenditure on which he has granted relief.;