COMMISSIONER OF INCOME TAX Vs. MAHAVIR PLANTATIONS LTD.

JUDGEMENT

(1.) THE Income Tax Appellate Tribunal, Cochin Bench, has referred the following question of law, for decision by this court at the instance of the Revenue, pursuant to the direction issued by this court in O. P. No. 2033 of 1996.

(2.) THE brief facts necessary for decision of the above question are as follows. The respondent -assessee is a limited company engaged in the cultivation and manufacture of tea. During the accounting period relevant to the assessment year 1986 -87, the assessee had deposited a sum of Rs. 18 lakhs under Section 33AB(1) of the Income Tax Act, 1961, for short "the Act", and claimed the entire deposit as deduction. The Assessing Officer while taking the profits of the assessee considered only 40 per cent of the business profit, amounting to Rs. 43,00,846 and did not take into account 60 per cent of the business profit of Rs. 63,63,273, and trading receipt of Rs. 65,195. Being aggrieved by the said order, the assessee filed appeal before the Commissioner of Income Tax (Appeals), who by his order dated October 13, 1989 (annexure B) held that the entire business profit from growing and manufacture of tea amounting to Rs. 1,06,05,455 has to be reckoned for the purpose of deduction under Section 33AB of the Act, and since 20 per cent of the profit worked out to Rs. 21,21,090, it was held that the deduction must be restricted to the amount of Rs. 18 lakhs deposited by the assessee. The first appellate authority has not reckoned the trading profit of Rs. 65,195 for the purpose of deduction under Section 33AB of the Act. Though the Department has filed appeal against this order before the Tribunal, it was dismissed.

(3.) LEARNED counsel, Sri Anil D. Nair, appearing for the assessee, on the other hand, submits that going by the provisions of Section 33AB of the Act is geared to the business profit from the growing and manufacturing of tea computed under the head "Profits and gains of business or profession" and that both the appellate authorities have rightly found that the deduction allowable under Section 33AB of the Act must be geared to the business profit of Rs. 1,06,05,455.