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TMI Blog2015 (8) TMI 428X X X X Extracts X X X X X X X X Extracts X X X X ..... f income would not deprive the company of its benefit under Section 32AB. - Decided in favour of assessee. - TAX APPEAL NO. 452 of 2000 - - - Dated:- 1-7-2015 - MR. A.J.DESAI AND MR. A.G.URAIZEE, JJ. FOR THE APPELLANT : MR NITIN K MEHTA, ADVOCATE FOR THE RESPONDENT : JUDGMENT : (PER : HONOURABLE MR.JUSTICE A.J.DESAI) By way of the present appeal under Section 260A of the Income-tax Act, 1961 [ the Act , for short] the Deputy Commissioner of Income-tax had challenged the judgment/order dated 13th December 1999 passed by the Income-tax Appellate Tribunal, Ahmedabad Bench in ITA 818/AHD/1994 by which the appeal preferred by the present appellant under Section 253 of the Act, was dismissed and the cross objections filed by the present respondents have been allowed. The challenge in the present appeal is the order passed by the authorities below in excluding certain income of the respondent under the provisions of Section 32AB of the Act. The Assessment Year under the present case is of 1990- 91. 2 At the time of admission, the following question was framed as substantial question of law for determination of the Court: Whether on the facts and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in the business of manufacturing pharmaceuticals and therefore the income received by the assessee from other than the business activity cannot be treated as eligible business income and therefore the respondent company, as such, is not entitled for claiming the benefit under Section 32AB of the Act. He would next submit that the Officer has rightly excluded the income of bank interest, interest on FDR, computer service charges, insurance premium, profit on sale of assets and occupancy charges while calculating the total income of the assessee. He would submit that this income earned by the assessee, cannot be treated as an income earned from the eligible since the assessee has failed to prima facie establish that the above referred income is earned by the assessee, in connection with the business transactions. He would submit that the CIT Appeal as well as ITAT have miserably failed in appreciating this important aspect while dealing with the case on hand. He would further submit that the assessee was bound to establish that the above referred income, earned by the assessee, is part of his business. In support of his submission, Mr Mehta has relied upon the decision of the Hon& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible deduction cannot reconmpute the profit of the assessee. The Supreme Court has dealt with the issue under Section 115J of the Act and the language of the Act in Section 32AB is identical as far as profits being in accordance with the requirement of Companies Act is concerned. 12 By relying upon a decision in the case of Carborandum Universal Limited v. Commissioner of Income-tax, 265 ITR 372 delivered by the Division Bench of Madras High Court, he would submit that it has been held that the dividend, interest and rent cannot be excluded while computing profits for purposes of Section 32AB of the Income-tax Act. 13 He has also relied upon the decision rendered by the Bombay High Court in the case of Commissioner of Incometax v. Parle Biscuits Limited, [2006] 282 ITR 547 (Bom) where it has been held that income from interest, rent, dividend, etc. would be covered under Section 32AB of the Act. Mr Soparkar has also relied upon the decision rendered by the Division Bench of Gauhati High Court in the case of Williamson Financial Services Limited v. Commissioner of Income-tax and another, [2007] 290 ITR 385 (Gawhati), by which it has been held that interest and dividend incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 any body 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 persons or body of individuals: Provided further that no such deduction shall be allowed in relation to the assessment year commencing on the 1st day of April, 1991, or any subsequent assessment year. (2) For the purposes of this section,- (i) (ii) new ship or new aircraft includes a ship or aircraft which before the date of acquisition by the assessee was used by any other person, if it was not at any time previous to the date of such acquisition owned by any person resident in India; (iii) new machinery or plant includes machinery or plant which before its installation by the assessee was used outside India by any other person, if the following conditions are fulfilled, namely :- (a) such machinery or plant was not, at any time previous to the date of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all-scale industrial undertaking, as defined in section 80HHA, for the purposes of business of construction, 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 section 288 and the assessee furnishes, along with his return of income, the report of such audit in the prescribed form51 duly signed and verified by such accountant : Provided that in a case where the assessee is required by or under any other law to get his accounts audited, it shall be sufficient compliance with the provisions of this subsection if such assessee gets the accounts of such business or profession audited under such law and furnishes the report of the audit as required under such other law and a further report in the form prescribed under this sub-section. 15 The assessment officer disallowed the claims made by the assessee under the provisions of S ..... 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