Income Tax Act
Deduction under section 33AB is allowable against composite income and not against only 40% of composite income- A case of un-necessary litigation by revenue in case of Tea Companies .
Computation provision:
Section 33AB is a provision relating to allowing deduction from business income. It falls under Part “D” of Chapter IV of the Income-tax Act, 1961. This part consists of various sections from section 28-44DB. As per section 29 the income referred to in section 28 shall be computed in accordance with the provisions ofsections 30 to 43D. Therefore, provisions of section 33AB falls within the scope of computation of income from business and profession and is not under Chapter VI A of the Act which relates to allowing deduction from gross total income of assessee.
Crucial words in the Provisions of section 33AB:
For the purpose of ascertaining the basis of computing the amount allowable the following words are crucial: “33AB. (1) Where an assessee carrying on business of growing and manufacturing tea in India has, before the expiry of six months from the end of the previous year or before furnishing the return of his income, whichever is earlier, deposited with the National Bank any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the assessee with the Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Tea Board, the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought form earlier years is set off under section 72) of- (a) a sum equal to the amount or the aggregate of the amounts so deposited; or (b) a sum equal to twenty per cent of the profits of such business (computed under the head “Profits and gains of business or profession” before making any deduction under this
Computation provision:
Section 33AB is a provision relating to allowing deduction from business income. It falls under Part “D” of Chapter IV of the Income-tax Act, 1961. This part consists of various sections from section 28-44DB. As per section 29 the income referred to in section 28 shall be computed in accordance with the provisions ofsections 30 to 43D. Therefore, provisions of section 33AB falls within the scope of computation of income from business and profession and is not under Chapter VI A of the Act which relates to allowing deduction from gross total income of assessee.
Crucial words in the Provisions of section 33AB:
For the purpose of ascertaining the basis of computing the amount allowable the following words are crucial: “33AB. (1) Where an assessee carrying on business of growing and manufacturing tea in India has, before the expiry of six months from the end of the previous year or before furnishing the return of his income, whichever is earlier, deposited with the National Bank any amount or amounts in an account (hereafter in this section referred to as the special account) maintained by the assessee with the Bank in accordance with, and for the purposes specified in, a scheme (hereafter in this section referred to as the scheme) approved in this behalf by the Tea Board, the assessee shall, subject to the provisions of this section, be allowed a deduction (such deduction being allowed before the loss, if any, brought form earlier years is set off under section 72) of- (a) a sum equal to the amount or the aggregate of the amounts so deposited; or (b) a sum equal to twenty per cent of the profits of such business (computed under the head “Profits and gains of business or profession” before making any deduction under this