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TMI Blog2004 (11) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... o infirmity in the order of the Tribunal. - - - - - Dated:- 5-11-2004 - Judge(s) : B. SUBHASHAN REDDY., M. KARPAGAVINAYAGAM. JUDGMENT The judgment of the court was delivered by M. Karpagavinayagam J.- The respondent is a company deriving income from tea. The assessment was made against the company for the assessment year 1989-90. The main objection to the assessment order is with regard to the restriction of the claim under section 32AB by the amount of interest and dividend incomes on the ground that such receipts are not profits of the eligible business. This point was not accepted by the appellate authority and the assessment order was confirmed. Consequently, the respondent filed an appeal before the Tribunal. The Tribunal accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the reason that the receipts by way of interest, dividends, etc., from investments from the profits of ineligible business would not form part of the eligible business profit and as such, the interest or dividend cannot be considered as receipts from the trade investments. This finding, in our view, is wrong for the following reason. Section 32AB which deals with investment deposit account in sub-section (1) provides that, "Subject to the other provisions of this section, 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, - ... shall be allowed a deduction (such deduction being allowed before the loss, if any, brought fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d liabilities; (vi) the amount by way of provision for losses of subsidiary companies; and (vii) the amount or amounts of dividends paid or proposed, if any debited to the profit and loss account; and as reduced by any amount or amounts withdrawn from reserves or provisions, if such amounts are credited to the profit and loss account." The reading of the above section would indicate that the calculation required to be made for the purpose of the above section is to commence with the figure representing the profits of the eligible business as computed in accordance with the requirements of Parts II and III of the Sixth Schedule to the Companies Act. From that figure, the amount equal to the depreciation computed in accordance with sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 32AB(1) is to be ascertained. The appellate authority, while confirming the assessment order, has excluded the dividend, interest, etc., reflected in the receipts relating to the profits of eligible business. By doing so, the appellate authority has failed to give effect to the plain language and the mandate of section 32AB(3). While dealing with a similar question, this court in Carborundum Universal Ltd. v. CIT [2004] 265 ITR 372, has observed as follows: "Having regard to the content of section 32AB(3) and the scheme of the whole section, it is clear that it is the computation made in terms of Schedule VI of the Companies Act that has to be the starting point, and all the things included in that computation are required to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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