TMI Blog2024 (3) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 32AB (1)(ii) the expression chargeable to profits and gains of business is conspicuous by its absence. Hence, the dichotomy as between the income from printing and rental income from house property is not warranted in terms of Section 32AB(3) of the Act. In our view, all eligible business or profession shall include every income except that which is excluded specifically in the definition of eligible business or profession. We find support for this view in Apollo Tyres Ltd. [ 1998 (8) TMI 68 - KERALA HIGH COURT] of Kerala High Court and [ 2002 (5) TMI 5 - SUPREME COURT] Hon ble Apex Court. It is not the case of the Revenue or the findings of the ITAT that appellant has in its account not shown rental income as part of the business income. Infact as per the assessment order, these charges have been considered as part of business income but the AO has excluded it for the purpose of profits to arrive at the eligible business income for the purpose of Section 32AB of the Act. Therefore, so long as the rental income is part of the business income, it will be included in the term of eligible business because the rental income is not excluded in the definition of eligible business. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B (2)(i) of the Act would mean all other activity resulting in profits will qualify for deduction under Section 32AB of the Act except the activities specified therein; (b) the ITAT failed to appreciate that Section 32AB (3) of the Act lays down the mode of computation of the profits of eligible business or profession starting from the amount of profits computed in accordance with the requirements of Parts II and III of the Sixth Schedule to the Companies Act, 1956 , subject to the adjustments enumerated in the said sub-section, viz., sub-section (3) of Section 32AB of the Act; (c) the assessment of rental income under the head income from house property as required under Section 22 of the Act does not alter the inherent character of the rental income which is business income; (d) this Court in Commissioner of Income Tax V/s. Diners Club India Ltd. (2001) 248 ITR 679 had upheld the finding of the ITAT that the profits of the business computed under the Companies Act took into account the dividend income and since the dividend income was part of the business income of the assessee, the assessee was entitled to include such income into profits from eligible business. In the same mann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to mean only profits of the assessee s income from business as defined in clause (i) of Section 32AB (2) of the Act. 6. Section 32AB (1), (2) and (3) of the Act read as under : Investment deposit account. 32AB. (1) Subject to the other provisions of this section, where an assessee, whose total income includes income chargeable to tax under the head Profits and gains of business or profession , has, out of such income, (a) deposited any amount in an account (hereafter in this section referred to as deposit account) maintained by him with the Development Bank before the expiry of six months from the end of the previous year or before furnishing the return of his income, whichever is earlier; or (b) utilised any amount during the previous year for the purchase of any new ship, new aircraft, 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 ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard established under section 4 of the Tea Act, 1953 (29 of 1953).] (3) [The profits of eligible business or profession of an assessee for the purpose of sub-section (1) shall, (a) in a case where separate accounts in respect of such eligible business or profession are maintained,] be an amount arrived at after deducting an amount equal to the depreciation computed in accordance with the provisions of sub-section (1) of section 32 from the amounts of profits computed in accordance with the requirements of Parts II and III of the [Sixth Schedule] to the Companies Act, 1956 (1 of 1956) [as increased by the aggregate of (i) the amount of depreciation; (ii) the amount of income-tax paid or payable, and provision therefor; (iii) the amount of surtax paid or payable under the Companies (Profits) Surtax Act, 1964 (7 of 1964); (iv) the amounts carried to any reserves, by whatever name called; (v) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; (vi) the amount by way of provision for losses of subsidiary companies; and (vii) the amount or amounts of dividends paid or proposed, if any debited to the profit and loss account; and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udited in accordance with sub-section (5), whichever is less. 9. Therefore, though the source of the amount for deposit or for the purchase of the new machinery should come from income chargeable to tax under the head profits and gains of business , the definition of eligible business or profession is rather wide. It is clear from the definition that except those business specified in clauses (a) and (b) of sub-section (2) of Section 32AB of the Act, all other business or profession have to be construed as eligible business. Put differently, an eligible business need not necessarily be an industrial undertaking engaged in the manufacture or production of an article. One of the components to be considered for deduction under sub-section (1)(ii) of Section 32AB of the Act is the profit of eligible business to the extent of 20% of the same. That profit has to be computed in the manner laid down in sub-section (3) of Section 32AB of the Act. Therefore, in our view, whatever income is earned by the assessee either from its activity of manufacture or production for sale or printing business or from other activities such as earning rental income from house property, as long as they consti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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