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TMI Blog2000 (6) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-tax (Appeals), however, took a different view and allowed benefit of deduction to the assessee under section 32AB of the Act, The Department feeling aggrieved, filed an appeal before the Tribunal and the Tribunal held that the activities of the assessee in earning business income and agricultural income had to be construed forming part of the same business activity eligible for deduction under the category of "eligible business" and the deduction to be computed under section 32AB(1)(ii) to the extent of 20 per cent. according to section 32AB(3) of the Act. The Tribunal also held that since the accounts have been prepared according to Part II and Part III of the Sixth Schedule to the Companies Act, 1956, as required under section 32AB(3) of the Act, the assessee would be entitled for benefit of section 32AB of the Act. The order of the Commissioner of Income-tax (Appeals) on this point was upheld. The brief facts as may be indicated are that during the relevant period of assessment, the assessee-company claimed that it sold agricultural produce (eucalyptus wood) amounting to Rs. 62,61,973 raised from leasehold land in which agricultural expenses to the extent of Rs. 21,66,915 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , new machinery or plant, without depositing any amount in the deposit account under clause (a), in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) to be framed by the Central Government, or if the assessee is carrying on the business of growing and manufacturing tea in India, to be approved in this behalf by the Tea Board, the assessee shall be allowed a deduction (such deduction being allowed before the loss, if any, brought forward from earlier years is set off under section 72) of--- (i) a sum equal to the amount, or the aggregate of the amounts, so deposited and any amount so utilised ; or (ii) a sum equal to twenty per cent. of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . ." Learned counsel for the Revenue submits that once the income has been held to be agricultural income exempt under section 10(1), there would be no occasion for allowing any deduction under section 32AB(1)(ii) of the Act, since such income is not included in the total income at all because of the exemption under section 10(1) of the Act. As a matter of fact, section 10 falls under Chapter III, namely, "incomes which do not form part of total income". We find that before section 10 starts there is a heading, "Incomes not included in total income". The section itself provides that in computing the total income, agricultural income shall not be included. It leaves no room for doubt that agricultural income would not form part of the total income. The total income would be after setting apart profits and gains from the agricultural profession that is the agricultural income. Such being the position, the question of further allowance of deductions as may be admissible under section 32AB(3) does not arise. A bare perusal of the language of section 32AB(1) of the Act shows that it is subject to the other provisions of that section and relates to an assessee whose total income includ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in India in such year by or on behalf of such person ; or (b) accrues or arises or is deemed to accrue or arise to him in India during such year ; or (c) accrues or arises to him outside India during such year : Provided . . ." It is submitted that the total income will include all income from whatsoever source derived or received. Then a reference is made to section 14 of the Act which falls in Chapter IV under the heading "Computation of total income". It then indicates the heads of income and clause (D) shows profits and gains of business or profession and clause (F) from other sources. Our attention has then been drawn to section 28 which provides for profits and gains of business or profession. Section 28 provides the income which is chargeable to income-tax under the head "Profits and gains of business or profession". It may be pertinent to indicate here that it does not indicate the income derived from agricultural operation. Section 32AB which also falls in Chapter IV is under the heading "Investment deposit account". Section 32AB has been quoted in the earlier part of the order. It is submitted that section 32AB speaks of total income which may come from whatsoev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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