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TMI Blog2014 (6) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1990-91. The assessee filed its return of income on October 29, 1991, declaring the total income of Rs. 70,75,210. The assessment came to be completed under section 143(3) of the Act on November 14, 1991. The assessee claimed deduction under section 32AB of the Act at 20 per cent. on Rs. 1,43,62,298 amounting to Rs. 28,72,480. However, the assessing authority allowed only a sum of Rs. 26,45,488 under this head. The revisional authority, by virtue of the power conferred to him under section 263 of the Act initiated proceedings on the ground that the assessment order was prejudicial to the interests of the Revenue in so far as the Assessing Officer allowed excessive relief under section 32AB of the Act. In pursuance of the notice issued, the assessee appeared and submitted its reply. The material on record discloses that the entire raw material imported with respect to which customs duty of Rs. 32,22,067 was paid was consumed in the production, within the accounting period. However, while computing the profit under section 32AB of the Act, the assessee did not deduct this customs duty out of the profit. Therefore, the revisional authority went into the question wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofits not being reduced with the amount of customs duty of Rs. 32,22,067 paid is in accordance with law and is well founded. Therefore, the appeal came to be dismissed. Aggrieved by the said order, the assessee is in appeal before this court. 4. This appeal was admitted on November 10, 2010, to consider the following substantial questions of law : "(i) Whether the customs duty paid under protest in pursuance of the interim order passed by the hon'ble High Court in writ petition where the levy was under dispute, was to be charged off in the profit and loss account under Part II and Part III of Schedule 6 to the Companies Act which would reduce the book profit to be computed for the purpose of deduction to be granted under section 32AB of the Act ? (ii) Whether the Tribunal was right in law holding that the Companies Act and the audited financial statements did not lead to the conclusion that the basic principles as enshrined in the computation of income in Part D of Chapter IV is done away with for the purpose of deduction under section 32AB of the Act ? (iii) Whether the Tribunal was right in law in interpreting the provisions of section 32AB to mean that the profits were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount in the deposit account under clause (a), in accordance with, and for the purposes specified in, a scheme (here after in this section referred to as the scheme) to be framed by the Central Government, or if the assessee is carrying on the business of growing and manufacturing tea in India, to be approved in this behalf by the Tea Board, the assessee shall be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of- (i) a sum equal to the amount, or the aggregate of the amounts, so deposited and any amount so utilised ; or (ii) a sum equal to twenty per cent. of the profits of business or profession as computed in the accounts of the assessee audited in accordance with sub-section (5), whichever is less : Provided that where such assessee is a firm, or any association of persons or anybody of individuals, the deduction under this section shall not be allowed in the computation of the income of any partner, or as the case may be, any member, of such firm, association of per sons or body of individuals : Provided further that no such deduction shall be allowed in rela tion to the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be allowed in respect of any amount utilised for the purchase of,- (a) any machinery or plant to be installed in any office premises or residential accommodation, including any accommodation in the nature of a guest house ; (b) any office appliances (not being computers) ; (c) any road transport vehicles ; (d) any machinery or plant, the whole of the actual cost of which is allowed as a deduction (whether by way of depreciation or otherwise) in computing the income chargeable under the head 'Profits and gains of business or profession' of any one previous year ; (e) any new machinery or plant to be installed in an industrial undertaking, other than a small scale industrial undertaking, as defined in section 80HHA, for the purposes of business of construc tion, manufacture or production of any article or thing specified in the list in the Eleventh Schedule. (5) The deduction under sub-section (1) shall not be admissible unless the accounts of the business or profession of the assessee for the previous year relevant to the assessment year for which the deduction is claimed have been audited by an accountant as defined in the Explanation below sub-section (2) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms relating to the income and expenditure of the company arranged under the most convenient heads ; and in particular, shall disclose the information mentioned therein in respect of the period covered by the account. One such information to be disclosed is the expenditure incurred on the items mentioned therein, separately for each item which includes rates and taxes, excluding taxes on income. Therefore, the requirement of law is, profit and loss account should disclose the information regarding expenditure incurred in respect of rates and taxes. It does not provide that the rates and taxes incurred as expenditure is to be deducted from the income. 11. It was contended that in terms of Part II, the profit and loss account of the assessee shows a sum of Rs. 32,22,067 which is paid as customs duty. The said amount has to be deducted out of the profit earned from the business or profession. It is only after deducting the said amount, the assessee is entitled to benefit of 20 per cent. of such profit being deposited in a Development Bank in terms of section 32AB. 12. As the said amount was not deducted in arriving at profit, the revisional authority and the Appellate Tribunal were j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accounts have been maintained in accordance with the provisions of the Companies Act. Sub-section (1A) of section 115J do not empower the authority under the Income-tax Act to probe into the accounts accepted by the authorities under the Companies Act. If the statute mandates that income prepared in accordance with the Companies Act shall be deemed income for the purpose of section 115J of the Act, then it should be that income which is acceptable to the authorities under the Companies Act. There cannot be two incomes, one for the purpose of the Companies Act and another for the purpose of Income-tax both maintained under the same Act. If the Legislature intended the Assessing Officer to reassess the company's income, then it would have stated in section 115J that "income of the company as accepted by the Assessing Officer". In the absence of the same and on the language of section 115J, it will have to be held that the view taken by the Tribunal is correct and the High Court has erred in reversing the said view of the Tribunal. The Assessing Officer, while computing the income under section 115J, has only the power of examining whether the books of account are certified by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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