AI Drafter 
TaxTMI 
TaxTMI 
2000 (11) TMI 292
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; G. Laxmi has been disallowed, though it has been allowed in the previous years. 2. Rs. 6,500 Amount spent towards advertisements in Magazines and publicity for Which entire information was furnished with full details of payments has been wrongly disallowed assuming the amount to have &n....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... first time. He made a prayer for the deletion of the disallowance. As against this, learned Sr. DR relied on the orders passed by the authorities below and prayed for non interference. 5. We have heard the rival submissions and find that the Assessing Officer made the disallowance on the ground that he was of the view that the business promotion expenses of Rs. 500 per month to each of the two directors paid was entertainment expenses. The very fact that the Assessing Officer accepts it as entertainment expenses goes to prove that the impugned expenses was incurred for the purposes of the assessee's business. Learned CIT (Appeals) without assigning any reason, upheld the disallowance and that too by holding that no documentary evidence was produced to prove the services rendered by the two ladies. Nothing was asked by learned CIT (Appeals) from the assessee as a proof of the services having been rendered, as is clear from the plain reading of the learned CIT (Appeals)'s order. Moreover the Assessing Officer accepts that expenditure as entertainment expenditure, accepting thereby the expenditure incurred for the purposes of business of the assessee. Besides, the remuneration of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....dividend income of Rs. 1,25,811, which comes to Rs. 24,155. As against this assessee went in appeal before the learned CIT (Appeals), who upheld the order of the Assessing Officer. 9. Before us, it was argued by the learned counsel for the assessee that appellant is an investment company and, therefore, dividend on chit investment which was made during the course of carrying on its business of financing and investment be treated as income chargeable to tax under the head 'business or profession' and, therefore, according to the learned counsel such income would, qualify for deduction under section 32AB. On the other hand learned Sri DR argued that dividend is dividend and is charged to tax under section 56 A 'income from other sources.' It was further argued by him that deduction under section 32AB cannot be allowed with reference to the income assessable under the head 'income from other sources' but was allow able only in relation to income chargeable to tax under the head 'business or profession.' He relied upon the judgment of the Hon'ble Madras High Court in the case reported in South India Shipping Corpn. Ltd. v. CIT [1999] 240 ITR 241. It was summed up by him by making pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ditions stand fulfilled the said section further mandates that the deduction shall be for a sum which is equal to 20 per cent of the profits of eligible business' and such profits are to be computed in the accounts of the assessee, as per the plain reading of the text of sub-clause (ii) to section 32AB. Sub-section (3) defines the 'profits of eligible business' to mean the profits computed in accordance with the requirements of Parts II and III of the Sixth Schedule to the Companies Act as increased by further adjustments enumerated therein but we are not concerned with them here. Profits of the business of an assessee for the purpose of deduction under section 32AB have to be computed as per the provisions of Parts II and III of Sixth Schedule to the Companies Act and not in accordance with the provisions of Income-tax Act. Therefore, splitting of profits of the business of the appellant company into different heads of income like under profits and gains of business or profession or income from other sources, is not required as is done for the purpose of computation of total income under Income-tax Act. This view finds support from the decision of Patna Bench of the ITAT in the ca....