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2014 (6) TMI 890 - HC - Income TaxInterpretations of provisions of section 32AB - Whether the customs duty paid under protest in pursuance of the interim order passed by the hon'ble High Court was to be charged off in the profit and loss account under Part II and Part III of Schedule 6 to the Companies Act which would reduce the book profit to be computed for the purpose of deduction to be granted under section 32AB? - Held that:- While deciding the benefit to which the assessee is entitled to under section 32AB of the Act, the Assessing Officer has only power to examine whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. Therefore, he cannot apply the principles under the Income-tax Act for the purpose of determining the profit of the assessee from business or profession for the purpose of section 32AB. There cannot be two incomes one for the purpose of the Companies Act and another for the purpose of the Income-tax Act maintained under the same Act for the purpose of section 32AB. After arriving at profits of business or profession of the assessee, as stipulated in sub-section (3) of section 32AB, the said provision also provides for addition to such income as stipulated therein. After such additions, the authority has to determine the profits of business or profession for the purpose of extending the benefit under section 32AB. In the instant case, even if in the profit and loss account a sum of ₹ 32,22,067 paid as customs duty had been deducted by virtue of sub-section (3) of section 32AB as it is a contingent liability and not a ascertained liability, it has to be added. In the instant case, as the said amount was not deducted, the question of adding would not arise. The assessing authority was justified in upholding the claim of the assessee who had not excluded the same from the profit of business or profession. Hence, the orders passed by the revisional authority as well as the appellate authority are not in accordance with law and they are required to be set aside, accordingly set aside. - Decided in favour of assessee.
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