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TMI Blog2004 (6) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... urces except those which are exempted has to be taken into consideration. In the above view, every income which is computed under the Companies Act has to be taken into consideration. - - - - - Dated:- 14-6-2004 - Judge(s) : S. SANKARASUBBAN., A. K. BASHEER. JUDGMENT The judgment of the court was delivered by S. Sankarasubban J. - In all the above cases, the assessee is the same, namely, the Kil Kothagiri Tea Produce Co. Ltd. While I.T.R. No. 179 of 1997 deals with the assessment year 1987-88, the other three cases relate to the assessment years 1988-89, 1989-90 and 1990-91. In I.T.R. No. 179 of 1997, the reference is at the instance of the assessee. In all the other three cases, the appeal is filed by the Department. In I.T.R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 342AB of the Income-tax Act? (2) Whether, on the facts and in the circumstances of the case and in the light of the definition of 'eligible business' obtained in section 32AB, is not the order of the Assessing Officer excluding certain items of income for the purpose of determining the benefit under section 32AB in accordance with law? (3) Whether, on the facts and in the circumstances of the case, the Tribunal is right in directing to allow the deduction under section 32AB without excluding the income from coffee produce, investments, agriculture and interest income and rent?" Under section 32AB(1)(ii) of the Income-tax Act, a sum equal to 20 per cent, of the profits of eligible business or profession as computed in the ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, its contention is that in computing the profits of eligible business, only the income from profession or business as stated in the Income-tax Act can be taken into consideration. On the other hand, learned counsel for the assessee submits that in granting concession of 20 per cent, profit, every head of profit which is stated under Parts II and III of Schedule VI to the Companies Act shall be taken into consideration. The assessee claimed deduction under section 32AB of the Income-tax Act on its entire income including the income from coffee, income from investments, interest and also rent on buildings. Learned counsel submits that even though the source of the amount for deposit or purchase of the new machinery should come from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 32AB of the Act is that the income shown as profession or business in the balance-sheet can be taken into consideration and not all the other. This court had occasion to interpret the profits of eligible business under section 32AB of the Income-tax Act in CIT v. Apollo Tyres Ltd. [1999] 237 ITR 706 (Ker), it is stated thus: "Section 32AB provides that where an assessee, whose total income includes income chargeable to tax under the head 'Profits and gains of business or profession', has, out of such income utilised any amount during the previous year for the purchase of new machinery or plant, the assessee shall be allowed a deduction of a sum equal to twenty per cent, of the profits of 'eligible business' as computed in the accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome from eligible business as well as non-eligible business." The above case was taken up in appeal before the Supreme Court in Apollo Tyres Ltd. v. CIT [2002] 255 ITR 273. In the above decision, the Supreme Court held thus: "the business of the assessee-company of buying and selling of units was an 'eligible business' as contemplated under section 32AB, and the income earned from its investment in the units of UTI had to be included in computing the profits of 'eligible business' under section 32AB. The fact that the income was shown under different head of income did not deprive the assessee-company of the benefit under section 32AB so long as the investment in the units was in the course of its 'eligible business'." Before the Madras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in sub-clauses (i) to (vii), therein. It is thereafter to be reduced by any amount or amounts withdrawn from reserves or provisions if such amounts are credited to the profit and loss account. It is thus amply clear that it is the computation made in accordance with subsection (3) of section 32AB which is to be the basis for determining the twenty per cent, of the profits of the business for the purpose of section 32AB(1)(ii). The computation of income under the provisions of the Income-tax Act is of no relevance for the purpose of determining the extent of benefit under section 32AB(1) or (2). In the light of the above decision, we are of the view that the income from eligible business including the income from all the sources except ..... X X X X Extracts X X X X X X X X Extracts X X X X
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