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Issues involved: Interpretation of deduction under section 32AB of the Income-tax Act, 1961 regarding inclusion of interest and dividend in income for the purpose of deduction.
Summary: The case involved a dispute regarding the deduction under section 32AB of the Income-tax Act, 1961, concerning the inclusion of interest and dividend in the income of an assessee-company owning tea estates. The Assessing Officer disallowed the deduction claimed by the company based on audit reports that did not exclude interest and dividend income unrelated to the tea business. The Tribunal, however, reversed the decision, considering interest and dividend as business income eligible for deduction under section 32AB. In the judgment, the court analyzed the provisions of section 32AB, emphasizing that for interest and dividend to be included in income for deduction under this section, they must be derived from the profits and gains of the business or profession. The court considered arguments from both sides, with the assessee's counsel highlighting the relevance of sub-section (3) of section 32AB in determining the inclusion of interest and dividend. Ultimately, the court concluded that the interest and dividend received should not be considered as part of the business income for the purpose of claiming deduction under section 32AB. Therefore, the court answered the question in the negative, ruling in favor of the Revenue and against the assessee. The judgment will be transmitted to the Income-tax Appellate Tribunal for further action.
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