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TMI Blog2000 (6) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment under section 143(3) of the Income-tax Act, 1961 the Assessing Officer found that the assessee had claimed a sum of Rs. 14,64,401 as deduction under section 32AB. He further found that for the purpose of arriving at the aforesaid deduction the assessee had taken the entire profits as per the profit and loss account. But according to the Assessing Officer interest receipts amounting to Rs. 22,90,640 and dividend income of Rs. 76,812, which were assessed under the head 'Other sources' were also included in the profit as per books. According to him, since the deduction under section 32AB was to be allowed at 20 percent of the profits and gains of the business only, these amounts were excluded from the profit for arriving at this deduction. Thus the allowable deduction under section 32AB was worked out by the Assessing Officer at Rs. 10,34,401 after excluding Rs. 23,67,452 from the profits as per books. The assessee was aggrieved and moved the matter in appeal before the first appellate authority, who confirmed the order of the Assessing Officer. The assessee is still aggrieved and is on second appeal before this Tribunal with the grounds of appeal extracted elsewhere in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eased by the aggregate of - (i) the amount of depreciation; (ii) the amount of income-tax paid or payable and provision therefor; (iii) the amount of surtax paid or payable under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (iv) the amounts carried to any reserves, by whatever name called; (v) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; (vi) the amount by way of provision for losses of subsidiary companies; and (vii) the amount or amounts of dividends paid or proposed, if any debited to the profit and loss account; and as reduced by any amount or amounts withdrawn from reserves or provisions, if such amounts are credited to the profit and loss account." She also drew our attention to Form 3AA of the Income-tax Rules, which is an Audit Report to be filed under section 32AB(5) by assessees who are claiming deduction under section 32AB. More particularly our attention was drawn to part HI of the said Form under the caption statement of particulars relating to claim for deduction under section 32AB. Still more particularly serial No. 4 of the said Part III of Form 3AA was read out, which is r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llate authority. Further he contended that the various sub-sections of section 32AB had been analysed in the order of the Tribunal cited supra [ITA No. 2053 (Mds)/ 1992]. Particularly he drew our attention to page 4 of the order of the Tribunal in ITA No. 2053 (Mds)/ 1992, wherein a reference is made to the decision of the Hon'ble Madras High Court in the case of South India Shipping Corpn. Ltd. v. CIT [1999] 240 ITR 24, wherein it was held that earning of income on short-term deposit in bank is not business income, but income from other sources. He further contended that only income from interest and dividend which had been included in the book profits had been deleted for the purpose of computing deduction under section 32AB because section 32AB deduction can be claimed only on income from business or profession and not on income from other sources. He also contended that the decision of the Kerala High Court in Appollo Tyres Ltd.'s case was on different facts, wherein the issue was whether purchase and sale of units was to be treated as eligible business or not. Further he relied on the decision of the Cochin Bench of this Tribunal in the case of Dy. CIT v. B.P.L. (India) Ltd. [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther words, the Companies Act has been borrowed by the Income-tax Act in the context of computation of deduction under section 32AB of the Income-tax Act. In the very same Income-tax Act in the context of section 115J similar borrowal of section 205 from Companies Act had occurred. While dealing with the situation under section 115J the Apex Court in its decision in the case of Surana Steels (P.) Ltd. v. Dy. CIT [1999] 237 ITR 777 has observed as under : "It was stated by Lord Blackburn: 'When a single section of an Act of Parliament is introduced into another Act, I think it must be read in the sense it bore in the original Act from which it was taken, and that consequently it is perfectly legitimate to refer to all the rest of that Act in order to ascertain what the section meant, though those other sections are not incorporated in the new Act.' Once we have ascertained the object behind the legislation and held that the provisions of section 205 stands bodily lifted and incorporated into the body of section 115J of the Income-tax Act, all that we have to do is to read the provisions plainly and apply the rules of interpretation if any ambiguity survives. Section 205(1), pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1956. When such is the position even for non corporate assessees, we are unable to appreciate the Revenue's argument that in the case of a corporate assessee who has followed strictly Parts II and III of Schedule VI to the Companies Act for arriving at the profit of the business, has to delete certain items of income, which were comprised in the profit and loss account prepared in accordance with the Companies Act. 8. Now let us turn to the decision of this Tribunal in ITA No. 2053 (Mds)/ 1992 in the case of The Nonsuch Tea Estates Ltd. With great respect to the decision of the said Bench we find that, as the assessee was absent at the time of hearing in that case, the decision of the Kerala High Court in Appollo Tyres Ltd.'s case was neither brought to the notice of the Bench, nor the Bench had occasion to consider the said Kerala High Court decision, which had elaborately dealt with the issue, unlike the decision of the Gauhati High Court in Dinjoya Tea Estate (P.) Ltd.'s case. Further on going through the said order of the Tribunal in which the various sub-sections of section 32AB had been extracted stressing the phrase 'income from business or profession' in various sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dictional High Court) we would like to consider those decisions in preference to the decisions of the Tribunal of any Bench. After considering the two decisions of the different High Courts, in the facts and circumstances of the present case, we are inclined to follow the decision of the Kerala High Court in Appollo Tyres Ltd.'s case, which is in favour of the assessee, in preference to the Gauhati High Court decision in Dinjoya Tea Estate (P.) Ltd.'s case, adopting the principle that when there are more than one view, the view which is favourable to the assessee should get preference, as propounded by the Apex Court in the well known case of Vegetable Products. 11. In addition to the fact that on merits also the point at issue is in favour of the assessee as discussed by us in paragraphs 6 and 7 above, we are of the opinion that, following the well propounded legal maxim by the Apex Court in the case of Vegetable Products, we are bound to prefer the decision of the Kerala High Court than that of the Gauhati High Court. Thus we set aside the orders of the authorities below and direct the Assessing Officer to include the income from interest and dividend in a sum of Rs. 23,67,452 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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