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TMI Blog2011 (5) TMI 166X X X X Extracts X X X X X X X X Extracts X X X X ..... g and manufacturing tea, on the question of deduction in terms of Section 33AB of the Act, the answer to the same depends upon the interpretation of the phrase “a sum equal to twenty per cent of the profits of such business (computed under the head “Profits and gains of business or profession” before making any deduction under this section), whichever is less - The question of application of Rule 8 does not come so long the profit or loss from the business of growing and manufacturing tea is determined after deduction of all permissible deductions under the Act - Decided in the favour of the assessee - I.T.A. No.651 OF 2004 - - - Dated:- 19-5-2011 - Mr. Justice Bhaskar Bhattacharya, Mr. Justice Sambuddha Chakrabarti, JJ. For the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 37 of the Act and disallowed the expenditure relating thereto. e) The appellant succeeded before the Commissioner of Income-tax (Appeals) for the Assessment Year 1988-89 but in the subsequent years, the disallowance was upheld. On further appeal, the Tribunal upheld the treatment of the transit flat as guest house within the meaning of sub-sections (4) and (5) of Section 37. The Tribunal, however, limited the nature of expenses which could be subjected to disallowance and held that disallowance could be made only in respect of depreciation and rent and that any other expenditure which was covered by the provisions of Sections 30 to 36 could not be disallowed under Section 37(4) of the Act. f) Section 80HHC of the Act provides for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flat expenditure under Section 37(4) of the Act. With regard to the appellant s claim for higher deduction under Section 33AB with reference to the assessed income, the Commissioner of Income-tax (Appeals) held that deduction under Section 33 AB was to be allowed after apportioning the composite income in the ration 60:40 and with reference to 40% of the composite income. The Commissioner of Income-tax (Appeals) also rejected the claim of the appellant under Section 80HHC by relying upon the retrospective amendment made by the Finance Act, 1999. j) Being dissatisfied, the appellant preferred a further appeal before the Income-tax Appellate Tribunal and the said Tribunal by the order impugned in this appeal rejected the claim of the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said finding/direction? c) Whether and in any event and on a true and proper interpretation of the provisions of section 33AB of the Act and rule 8 of the Rules, the Tribunal was justified in law in holding that deduction under section 33AB was to be calculated on 40% of the income determined under rule 8? d) Whether on a true and proper interpretation of the provisions of section 80HHC of the Act and those or rule 8 of the Rules, the deduction under section 80HHC is to be computed and allowed before applying the said rule 8 and the Tribunal was justified in law in rejecting the appellant s said contention? Mr. Khaitan, the learned Senior Counsel appearing on behalf of the appellant, at the very outset, fairly conceded tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eported in (2008) 297 ITR 17 has taken the same view. In view of such fact, we answer the said question in the affirmative against the assessee. As regards the second question formulated by the Division Bench, according to Mr. Khaitan, the Commissioner of Income-tax (Appeals) acted without jurisdiction in passing direction upon the assessee on the aforesaid question although no such point was taken by the appellant before the first appellate authority. In other words, Mr. Khaitan submits that it was the duty of the Tribunal to set aside the said direction of the Commissioner of Income-tax (Appeals) as the said direction was beyond the scope of the appeal. Mr. Khaitan, thus, prays for setting aside those two parts of the order passed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fession before making any deduction under this section), whichever is less: We are of the opinion that in a case where the assessee is involved in the business of growing and manufacturing tea, on the question of deduction in terms of Section 33AB of the Act, the answer to the same depends upon the interpretation of the phrase a sum equal to twenty per cent of the profits of such business (computed under the head Profits and gains of business or profession before making any deduction under this section), whichever is less: as indicated above. Thus, of the two amounts, i.e. the amount deposited in the Nationalised Bank in terms of the first part of Section 33AB (1) and the aforesaid sum, whichever is less, should be deducted first. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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