TMI Blog1998 (4) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... <![endif]--><!--[if gte mso 10]> /* Style Definitions */ table.MsoNormalTable {mso-style-name:"Table Normal"; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-priority:99; mso-style-qformat:yes; mso-style-parent:""; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin-top:0in; mso-para-margin-right:0in; mso-para-margin-bottom:10.0pt; mso-para-margin-left:0in; line-height:115%; mso-pagination:widow-orphan; font-size:11.0pt; mso-bidi-font-size:10.0pt; font-family:"Calibri","sans-serif"; mso-ascii-font-family:Calibri; mso-ascii-theme-font:minor-latin; mso-fareast-font-family:"Times New Roman"; mso-fareast-theme-font:minor-fareast; mso-hansi-font-family:Cali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness as under :- (baa ) profits of the business means the profits of the business as computed under the head Profits and gains of business or profession as reduced by- (1)ninety per cent of any sum referred to in clauses (iiia), (iiib) and (iiic) of section 28 or of any receipts by way of brokerage, commission, interest, rent, charges or any other receipt of a similar nature included in profits; and (2)the profits of any branch, office, warehouse or any other establishment of the assessee situate outside India ; It is clear that profits of business for purposes of this section are to be reduced by 90 per cent of any sum referred to in the three clauses of section 28 or of any receipts by way of brokerage, commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned CIT and contended that gross amount of receipt credited to the Profit Loss Account is to be deducted. The Legislature in its wisdom allowed 10 per cent of expenditure and, therefore, 90 per cent of above was to be deducted while arriving at the business profit . 5. We have given careful thought to the rival submissions of the parties. In our considered opinion, the language of clause (baa) is quite clear and controversy relating to gross or net amount of receipts referred to in clause (1) is being unnecessarily raised. The profits and gains of business and profession are required to be reduced by 90 per cent of receipts mentioned in the clause and included in such profits , i.e., profits and gains of business. Thus, recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier and that would be income by way of dividends from a domestic company which is included in the gross total income. 6. The second category of cases where receipts by way of brokerage, commission, interest etc. are credited to the Profit Loss Account and against them some expenditure are claimed in a common account, the exact amount claimed as expenditure, is neither available nor discernible. In several decisions, the Courts held that expenditure on proportionate basis against such receipts is to be taken into account and net income is to be determined. For determining such net income different formulae like proportionate receipt, etc. were suggested. In order to override such a situation, the Legislature has laid down a formul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee starting with net profit of ₹ 3,76,02,601. The above figure included receipt of other income including consultancy fees of ₹ 74,43,443 credited to the Profit Loss Account as per Schedule Q. In the Schedule Q, the detail of ₹ 74,43,443 is given and includes net consultancy receipt of ₹ 1,78,528. In the amount credited to the Profit Loss Account, consultancy fees included is not ₹ 6,84,932 but ₹ 1,78,528 after deducting expenses therefrom amounting to ₹ 5,06,403. In the assessment and in the computation of business profit, the expenditure specifically claimed against the receipt have been allowed and net amount of consultancy fee assessed is ₹ 1,78,528. Thus, when net amount of recei ..... X X X X Extracts X X X X X X X X Extracts X X X X
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