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TMI Blog2011 (4) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... le of hot glass. In the assessment year 1990-91, the company earned income by way of business and also by way of making investment in the securities. It mostly invested the money in the units of Unit Trust of India. The dividends received from the UTI were shown in the profit and loss accounts prepared as per Part-II and Part-III of Schedule-VI of the Companies Act, 1956, as income from other sources. 4. The assessing authority observed that the assessee has wrongly claimed the Octroi & Entry tax of Rs. 12, 89, 914/- to be the business income, but while calculating the deductions under Section 32-AB of the Act with reference to profit from business, the assessing authority excluded the same amount from the total business income. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restored the matter to the file of CIT (A), for reconsideration in respect of expenditure of Rs. 10, 83, 079/-, and profit of the business of Rs. 5, 68, 19, 640/-, after deducting the interest paid to the West Bengal Government. 7. The appellant has raised following substantial questions of law for consideration by this Court:- "(I) Whether on the facts and in the circumstances of the case, the Income Tax Tribunal, Allahabad was right in holding that the profits of eligible business under sub section (1) (ii) of Section 32AB read with sub-section 3 (a) thereof the Income Tax Act, 1961 would not include any income from interest or dividend which forms part of business profits as computed in accordance with the requirement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee's investment in the UTI is business, and if so, is it a business which qualifies to be an ''eligible business' under section 32AB? In regard to the first aspect, we must note that the Tribunal as a question of fact based on material on record has come to the conclusion that the investment in the UTI by the assessee-company is in the course of its business and its businesses of manufacture and sale of tyres and sale and purchase of units of the UTI are common in nature and both the businesses are intertwined and interlaced. This finding is accepted by the High Court also. We also find that this business of the assessee-company of buying and selling of units is a business as contemplated under section 32AB. The question then is: is it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome from selling tea leaves. The investment in the shares was not found to be the business of the assessee. The Calcutta High Court held that the deduction under Section 32AB of the Act is allowable only on the basis of profit from "business or profession" and not from the income from other sources. When investment in shares is neither a business nor a profession of the assessee, the dividend income received from those shares on account of shares held by the assess cannot be treated as income from the "business or profession". 10. In this case we have to find out if the questions raised before us, is covered by the judgment of Supreme Court in Apollo Tyres Ltd's case. In the present case in the 'Memorandum of Association' of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he units of the UTI and its business of manufacture and sale of tyres was pooled together in a common account of funds which was managed by one common management. It was contended that the business of buying and selling units of the UTI and the manufacture and sale of tyres is so intertwined and interlaced, that the same cannot be separated and treated independently, and therefore, this income from the UTI being part of its business income, the Company was entitled to claim the benefit of Section 32AB of the Act. 12. The Supreme Court in Appolo Tyres Ltd held that under Section 32AB as it stood at the relevant time, if an assessee has a total income including income chargeable to tax under the head "Profits and gains of business or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om UTI under the head "other sources", in its profit and loss account, in the annual account of the year ending 31.3.1990. During the year the assessee has shown investment of Rs. 2, 88, 15,100/-, in 19, 80, 000 units of UTI. The purchase and sale of units disclosed by the assessee in its accounts is as follows:- "Statement of purchase and sale of UTI units Particulars Opening units Purchases Sales A.Y. 1988-89 5,00,000 units - - A.Y.1989-90 5,00,000 23,80,000 12,00,000 A.Y.1990-91 16,80,000 Nil Nil 14. The facts of this case are different than the facts of the case of Apollo Tyres Ltd. There is no material, nor the statement of accounts shows, that income received by the company as dividend from UT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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