2001 (10) TMI 47

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..... he book profit of the undertaking as a whole computed in accordance with Schedule VI of the Companies Act, and not on the business income computed as per the provisions of the Income-tax Act?" The assessment years are 1987-88 and 1988-89. The assessee, which is engaged in the business of banking, claimed the benefit of section 32AB(1) and for that purpose, it relied upon the calculation of the profits of its business, which was made in accordance with sub-section (3) of section 32AB. That sub-section, as it stood, during the relevant year, is as under: "(3) The profits of business or profession of an assessee for the purposes of sub-section (1) shall be an amount arrived at after deducting an amount equal to the depreciation compute .....

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..... Act. His view was upheld in appeal but reversed by the Tribunal on further appeal and, in our view, rightly so. What has been done by the assessee is not strictly in accordance with the requirement of the statutory provision. Section 32AB(3) nowhere refers to the computation of the income under the provisions of the Income-tax Act. No such requirement can be imported into it. The view adopted by the Assessing Officer and the appellate authority would find no support whatever from any part of section 32AB. Section 32AB provides a benefit to the assessee. The benefit so provided is an incentive to an assessee, who deposits any amount in a development bank before the expiry of six months from the end of the previous year or before furnishi .....

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..... e 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). The computation under the Income-tax Act is relevant after the ascertainment of the amount of the deposit and the twenty per cent. of the profits of the business calculated in accordance with section 32AB(3), and the amount to be allowed in the computation under the Income-tax Act is the lower of the two figures and the deduction is to be allowed in the manner provided in section 32AB(1) of the Act. The question referred to us is, therefore, answered against the Revenue and in favour of the assessee. The Revenue shall pay costs in the sum of .....

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