Law: Income Tax Act, 1961

Section: 32AB

Income-tax-----Business expenditure---Investment deposit ---Assessee engaged in manufacture and sale of tea---Interest and dividend not includible in income for purposes of calculating deduction---Indian Income Tax Act, 1961, S.32-AB. The assessee-company owned two tea estates and its business was to grow, manufacture and sell tea. The question before the Court was whether interest and dividend were to be included in its income for the purpose of calculating the deduction under section 32-AB of the Income Tax Act, 1961: Held, that in order to invoke the provisions of section 32-AB of the Act, the interest and dividend must be out of the income of the assessee under the head "Profits and gains of business or profession". Hence, the interest and dividend could not be included in the income of the assessee ¬company for calculating the deduction under section 32-AB of the Act. JUDGMENT D. N. BARUAH, J. ---By this reference under section 256(1) of the Income Tax Act, 1961 (for short, "the Act"), the following question has been referred for the opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that interest and dividend are to be included in income for the purpose of deduction under section 32-AB of the Income Tax Act, 1961?" The facts for the purpose of answering this question are: The assessee-company owns two estates, namely, Dinjoye Tea Estate and Limbuguri Tea Estate. The business of the assessee-company is to grow, manufacture and sale of tea. The relevant assessment year was 1988-89. The Assessing Officer completed the assessment under section 143(3) of the Act determining the total income at Rs.45,26,500. The assessee-company claimed deduction of an amount of Rs.1,97,310 received on tax-free bonds. However, the Assessing Officer did not accept the contention of the assessee-company and accordingly refused to deduct the same. The assessee-company also claimed deduction under the provisions of section 32-AB of the Act on the basis of the audit report under Form No.3AA. The Assessing Officer held that in the audit report under section 32-AB, while computing the profit of business, the…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492