TMI Blog2011 (4) TMI 778X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in favour of the department. - 6 OF 2002 - - - Dated:- 18-4-2011 - Sunil Ambwani, Kashi Nath Pandey, JJ. 1. We have heard Shri N.C. Gupta, learned counsel for the appellant. Shri A.N. Mahajan appears for the department. 2. This Income Tax Appeal under Section 260-A of the Income Tax Act, 1961 (the Act) arises out of the order passed by the Income Tax Appellate Tribunal, Allahabad Bench, Allahabad dated 28.8.2001 in I.T.A. No. 380 (Alld)/1993, for the assessment year 1990-91. 3. The appellant-company is a public limited company engaged in the manufacture and sale of hot glass. In the assessment year 1990-91, the company earned income by way of business and also by way of making investment in the securities. It mostly inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and carrying on business of shares. In this case it was found that the assessee company had invested the amount in the units for the purposes of earning dividend. The Tribunal also found that it was not clear as to how the expenditure of Rs.10,83,079/- could be considered for the purposes of allowing deductions under Section 32AB of the Act. Neither the AO, nor CIT (A) had recorded the findings that this expenditure was debited to profit and loss account; the same could not be deducted from the profit of the eligible business. Since the facts were not clear, the Tribunal restored the matter to the file of CIT (A), for reconsideration in respect of expenditure of Rs. 10, 83, 079/-, and profit of the business of Rs. 5, 68, 19, 640/-, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... special deduction in computation as eligible business. The Supreme Court also considered the question, whether loss in the speculation business of UTI is a business loss, in case the UTI is deemed to be a company; and whether in such case the fiction to make the UTI a deemed company and distribution of income as deemed dividend for the purposes of the Income Tax Act, Section 32 (3) of the Unit Trust of India Act, 1963 will be attracted. The supreme Court held as follows:- "The dispute in the present case is in regard to the question whether the assessee's investment in the UTI is business, and if so, is it a business which qualifies to be an ''eligible business' under section 32AB? In regard to the first aspect, we must note that the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts investment in the UTI should be included in computing the profits of ''eligible business' under section 32AB." 9. Shri A.N. Mahajan appearing for the department has relied upon judgment of Calcutta High Court in Commissioner of Income Tax v. Warren Tea Ltd. (2001) 251 ITR 382 (Cal), in which, relying upon CIT v. Dinjoye Tea Estate (P) Ltd. (1997) 224 ITR 263 (Gauhati), it was held that the benefit of Section 32-AB, of the Act, cannot be extended to the dividend income. The assessee in that case was the owner of the tea garden. It derived income from selling tea leaves. The investment in the shares was not found to be the business of the assessee. The Calcutta High Court held that the deduction under Section 32AB of the Act is allowab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed by the High Court. 12. In reply to the argument of the revenue authority that the income received by the assessee-company from its investment in the UTI has been declared by the company itself as an "income from other sources", the assessee (Apollo Tyres Ltd.) had contended that its income from sale and purchase of units of the UTI, is part of its regular business and that it held these units as stock-in-trade, and has been doing the business of buying and selling the same. The income from business of investment in the units of the UTI and its business of manufacture and sale of tyres was pooled together in a common account of funds which was managed by one common management. It was contended that the business of buying and se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom dividends of units of UTI was utilized in the main business of the company, in manufacturing and sale of glass or for any other purpose. The Income Tax Tribunal recorded a finding that in the case of assessee (in the present case) it was found that the assessee company has invested the amount in the units for the purposes of earning dividend, and not as business of sale and purchase of units. The statements of purchase and sale of UTI units was maintained separately and the company had treated the income as dividend from UTI under the head "other sources", in its profit and loss account, in the annual account of the year ending 31.3.1990. During the year the assessee has shown investment of Rs. 2, 88, 15,100/-, in 19, 80, 000 units of U ..... X X X X Extracts X X X X X X X X Extracts X X X X
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