TaxTMI 
TaxTMI 
1996 (8) TMI 148
X X X X Extracts X X X X
X X X X Extracts X X X X
....e allowed deduction under section 32AB. " 4. Subsequently, the assessee sought to raise the following additional ground, vide petition dated 6-1-1996 : " That on the facts and in the circumstances of the case, the assessee ought to be allowed deduction under section 32AB even though the prescribed reports have been furnished for the first time after the order of CIT(A) under appeal. " 5. During the course of hearing before us, Shri Khabia, the ld. counsel for the assessee, withdrew the above additional ground. Withdrawal of additional ground was not objected to by the revenue. After hearing both the sides, we permitted withdrawal of the above additional ground and, accordingly, the same is dismissed as withdrawn. We now proceed to decide the ground of appeal originally taken, which has already been extracted above. 6. Inviting our attention to sub-section (1) of section 32AB, Shri Khabya, the ld. counsel for the assessee, submitted that an assessee is entitled to a deduction of an amount up to 20% of the profits of 'eligible business' or 'profession', if the said amount is either deposited with the Development Bank within the period up to six months from the end of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment proceedings also, the assessee had made claim of deduction again under section 32AB, which was also negatived by the Assessing Officer. On appeal, the CIT(A) also rejected the assessee's claim in his appellate order in IT-703/94-95 dated 7-9-1995. Shri Khabya argued that the basic conditions for claim of deduction as prescribed under sub-section (1) of section 32AB have been satisfied by the assessee-company inasmuch as the assessee deposited a sum of Rs. 10,00,000 with IDBI on 30-12-1987 in investment deposit a/c bearing No. 0000005 and filed copy of receipt No. 00029 with original return filed on 30-6-1988. He pointed out that the above deposit was made within the prescribed time limit, i.e., within six months from the end of the previous year. The previous year of the assessee, relevant to the assessment year under consideration, ended on 30-6-1987. He further submitted that the assessee utilised a further sum of Rs. 1,51,200 during the previous year for purchase of new plant and machinery. Inviting our attention to statement of particulars relating to the claim for deduction under section 32AB, which formed part of the audit report in Form No. 3AA under Rule 5AB, he s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d before the Assessing Officer the audit report as also the report in Form No. 3AA soon after receipts thereof by the assessee. 9. We have considered the rival submissions, perused the orders of the lower authorities as also the material placed before us. It is not in dispute that the assessee is a Government company. For the assessment year 1988-89, presently under consideration, its previous year ended on 30-6-1987. The assessee's claim of deduction under section 32AB has been rejected on the sole ground that the audit report and the report in the prescribed Form No. 3AA had not been furnished along with the return. In order to appreciate the controversy involved in the case, we think it necessary to extract the relevant provisions :---- " 32AB.(1) Subject to the other provisions of this section, where an assessee whose total income includes income chargeable to tax under the head 'Profits and gains of business or profession', has, out of such income---- (a) deposited any amount in any account (hereafter in this section referred to as deposit account) maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before f....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that the assessee had deposited an amount of Rs. 10,00,000 in investment deposit a/c with the Development Bank on 30-12-1987, which is within six months from the end of the previous year relevant to the assessment year 1988-89 presently under consideration. It is also not in dispute that the assessee had utilised an amount of Rs. 1,51,200 for purchase of new plant and machinery. Thus, the total of the deposit with Development Bank and the amount utilised for purchase of new plant and machinery worked out to Rs 11,51,200. The assessee had claimed that the amount of Rs. 11,51,200 qualified for deduction under section 32AB, as it was less than 20 per cent of eligible profits worked out as per the audit report. As stated earlier, the above claim was negatived by the revenue authorities because the assessee had not furnished audit report along with its return of income. The stand of the assessee is that its case falls squarely within the ambit of the proviso to sub-section (5) because the assessee is required to get its accounts audited under the provisions of the Companies Act and since the assessee is a Government company, the auditors are appointed by the Comptroller and Auditor Gen....