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Section 32AB of the Income-tax Act, 1961 read with Parts II and III of Schedule VI to the Companies Act, 1956 - Investment deposit account - Assessment years 1987-88 to 1990-91 - Whether while computing deduction of 20 per cent of profit under section 32AB, income from eligible business including income from all sources except those which are exempted and every income which is computed under Companies Act, has to be taken into consideration - Held, yes FACTS The assessee-company claimed deduction under section 32AB on its entire income including the income from coffee, income from investments, interest and also rent on buildings. According to the assessee, in calculating the profits, all the profits shown under the Companies Act should be taken into consideration. On the other hand, the department took the view that so far as the income was concerned only the profits and gains from profession could be taken into account and not the profits and gains of the company as a whole should be taken into account. On reference/appeal : HELD In view the Supreme Court's decision in CIT v. M.L. Mahajan [2002] 255 ITR 272/ 123 Taxman 76 the income from eligible business including income from all sources except those which are exempted has to be taken into consideration. Further, every income which is computed under the Companies Act, has to be taken into consideration. Hence, the profits of eligible business computed in accordance with the requirements of Parts II and III of Schedule VI to the Companies Act should not be reduced by income from coffee, income from investments, interest and rent for the purpose of computing the deduction allowable under sub-clause (ii ) of clause (b) to section 32AB(1).[Para 7] CASES REFERRED TO CIT v. Apollo Tyres Ltd. [1998] 101 Taxman 167 /[1999] 237 ITR 706 (Ker.) [Para 4], CIT v. M.L. Mahajan [2002] 255 ITR 272 /123 Taxman 76 (SC) [Para 5] and CIT v. Tamil Nadu Mercantile Bank Ltd. [2002] 255 ITR 205/[2003] 126 Taxman 45 (Mad.) [Para 6]. P.K.R. Menon and George K. George for the Appellant. P. Balachandran and Smt. Preetha S. Nair for the Respondent. JUDGMENT S. Sankarasubban, J. - In all the above cases, the assessee is the same, namely,…

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