TaxTMI 
TaxTMI 
1999 (4) TMI 110
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....rces. 2. In computing the income for the assessment year 1990-91 the assessee claimed deduction under section 32AB of the Income-tax Act at 20% on the entire income including Rs. 39,375 as dividend and Rs. 5,25,318 as capital gains on the sale of land. In the assessment, the Assessing Officer held that the deduction was to be computed on the profits and gains of the business only excluding the capital gains and the dividend income. In the assessee's appeal, the CIT(Appeals) held that the Assessing Officer was not justified in excluding the capital gains and dividend income for the purpose of deduction under section 32AB. Aggrieved with the order of the CIT (Appeals), the revenue has filed this appeal before the Tribunal. 3. We have he....
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....ng for the assessee supported the order of the CIT(Appeals) and submitted that the appellate authority had given the correct decision that the deduction under section 32AB was to be given on the profits computed in accordance with the requirements of Parts II and III of Schedule VI of the Companies Act, 1956. Shri Sarangan stated that the assessee-company had computed the profits in accordance with the requirements of Parts II and III of Schedule VI of the Companies Act. In that computation all the receipts including the dividend income and the gain on the sate of land were included. It was pointed out that a sum of Rs. 39,375 as dividend and a sum of Rs. 5,25,318 as capital gains were credited in the profit and loss account for the year en....
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....rect in reversing the order of the Assessing Officer. Shri Sarangan added that the decision of the Gauhati High Court in Dinjoye Tea Estates (P) Ltd. 's case did not lay down the law that in all cases of deduction under section 32AB, the computation should be on the net amount after excluding the income from dividend, capital gains etc. According to the learned counsel, it was in the circumstances of that case and on the basis of the question referred for the opinion of the High Court that the decision had been given to allow the deduction at 20% of the 'profit of the business' as such without including income from other sources etc. 5. We have given due consideration to the submissions on both sides and gone through the facts of the cas....
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....e with sub-section (5)." On an analysis of this clause, it can be seen that, (1) the deduction is at 20% of the profits of the eligible business, (2) the profits of the eligible business should be as computed in the accounts of the assessee, and (3) the accounts should be audited in accordance with sub-section (5). 6. The issue that requires consideration is - the profits of the eligible business as computed in the accounts of the assessee. It may be seen that unlike in sub-section (3), here the requirement is that the profits of the eligible business should be as computed in the accounts of the assessee. In the case of Dinjoye Tea Estates (P.) Ltd. the question before the Gauhati High Court was whether interest and dividend were to b....