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<h1>High Court affirms Tribunal decision on appeal competency & 'profit' interpretation in income-tax rules</h1> The High Court upheld the Tribunal's decision regarding the competency of an appeal before the Appellate Assistant Commissioner and the interpretation of ... 'Profits' In Rule 19(5), Appeal To AAC, Change Of Law, New Industrial Undertaking, Special Deduction Issues:1. Competency of the appeal before the Appellate Assistant Commissioner.2. Interpretation of the term 'profit' in rule 19(5) of the Income-tax Rules, 1962.Competency of the appeal before the Appellate Assistant Commissioner:The case involved a dispute regarding the competency of an appeal before the Appellate Assistant Commissioner raised by the assessee. The Income-tax Officer had rejected the claim of the assessee related to the computation of profit for deduction purposes under section 84 of the Income-tax Act, 1961. The Appellate Assistant Commissioner allowed an increase in capital, and the assessee later sought to challenge the appeal's competency. The Tribunal held that the assessee cannot challenge the order passed by the Appellate Assistant Commissioner after inviting the Tribunal to entertain the appeal. The Tribunal's decision was upheld by the High Court, emphasizing that a party cannot raise objections to jurisdiction after allowing the Tribunal to adjudicate in the hope of a favorable outcome.Interpretation of the term 'profit' in rule 19(5) of the Income-tax Rules, 1962:The second issue revolved around the interpretation of the term 'profit' in rule 19(5) of the Income-tax Rules, 1962, concerning the deduction claimed by the assessee under section 84 of the Act. The Tribunal held that 'profit' in rule 19(5) should signify profit as per the profit and loss account of the assessee without adding back depreciation. The High Court agreed with the Tribunal's interpretation, citing a Supreme Court decision that 'profit' in similar provisions refers to taxable profit after permissible deductions. Therefore, the term 'profit' in rule 19(5) should be construed to mean taxable profit, and depreciation should not be added back for determining profit under this rule.In conclusion, the High Court upheld the Tribunal's decision on both issues, ruling in favor of the Revenue and against the assessee. The questions referred by the Tribunal were answered in the affirmative. No costs were awarded in the judgment.
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