9911796707
TMI Blog2003 (11) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act was in accordance with section 32AB even though all those amounts form part of the computation that was required to be made in terms of Parts II and III of the Sixth Schedule to the Companies Act for arriving at the profits from the assessee's business. 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 ailowed before the loss, if any, brought forward from earlier years is set off under section 72) of- (i) a sum equal to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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of dividends paid or proposed, if any debited to the profit and loss account; and as reduced by any amount or amounts withdrawn from reserves or provisions, if such amounts are credited to the profit and loss account." Thus, the calculations required to be made for the purpose of the 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 section 32(1) of the Income-tax Act is to be deducted. After such deduction, that amount is to be increased by the aggregate of the amounts set out in (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of interest as also income from investment, which would include dividend, are clearly amounts which are required to be taken note of while making the calculations required to be made for the purpose of Parts II and III of the Sixth Schedule to the Companies Act. Income from rent, though not specifically referred to, being part of the total income of the company, must necessarily be accounted for in the profit and loss account required to be drawn up in accordance with Parts II and III of the Sixth Schedule to the Companies Act. Section 32AB does not require the profit for the purpose of section 32AB(1) to be calculated in accordance with the provisions of the Income-tax Act. All that it provides is that the calculations should first be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel had advanced with regard to section 32AB, though set out, was not considered on the ground that the question referred to the court did not permit such consideration. In the Calcutta case, the court noticed the fact that the Tribunal had held in favour of the assessee by holding that section 32AB(3) requires the calculations to be made in accordance with the Sixth Schedule to the Companies Act and, therefore, the dividend received by the assessee is to be taken into account while determining the profit, but did not consider the correctness or otherwise of that view as it proceeded to hold that the decision of the Gauhati High Court covered the case before them. Having regard to the content of section 32AB(3) and the scheme of the whole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 26,00,000 and the income therefore, had to be revised upwards by Rs. 44,00,000. The other reason given was that during the finalisation of accounts the provisions made for various expenditures were reviewed and excess provision to the extent of Rs. 25,43,000 in the books was added back to the profit and loss account which resulted in an increase of income by that mount. The assessee's submission was that these figures could not be estimated accurately while filing the estimations for the first and second instalments and while paying the advance tax. The Tribunal has upheld the levy of interest under section 216 of the Income-tax Act by observing that as the previous year of the assessee had ended on August 31, 1985, the assessee had suff ..... X X X X Extracts X X X X X X X X Extracts X X X X
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