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“profits and gains of business or profession”

Income HeadsSection 28Section 281,710 judgments

The decision most relied on for profits and gains of business or profession is CIT v. Excel Industries Ltd. (358 ITR 295), cited in 935 judgments on BharatTax.

Leading authorities on profits and gains of business or profession

CIT v. Excel Industries Ltd.
358 ITR 295 · 2013 · Supreme Court
935
citing judgments

When an income or expenditure is revenue neutral across different assessment years, where any benefit derived is offset by a corresponding liability or reversal, no additional tax liability arises, particularly concerning income recognition under the mercantile system of accounting.

Southern Technologies Ltd. v. JCIT
320 ITR 577 · 2010 · Supreme Court
353
citing judgments

The case concerns the allowability of deductions for provisions made under Section 36 of the Income Tax Act, 1961, especially those related to bad and doubtful debts. It distinguishes such deductions from the recognition of interest income on non-performing assets (NPAs).

Attar Singh Gurmukh Singh v. ITO
191 ITR 667 · 1991 · Supreme Court
254
citing judgments

Section 40A(3) is not absolute, and its application considers business expediency, practical difficulties, and other relevant factors, while keeping in mind its objective to curb the practice of ploughing unaccounted money into the system.

Karanpura Development Co. Ltd. v. CIT
44 ITR 362 · 1962 · Supreme Court
157
citing judgments

The income derived from letting out assets, such as coal mining leases, constitutes "profits and gains of business or profession" if the primary object and activity of the assessee company are to acquire, develop, and sub-lease such assets. This classification holds even if the income arises from letting, provided the letting itself constitutes the assessee's business.

(P.) Ltd. v. CIT
56 ITR 52 · 1965 · Supreme Court
146
citing judgments

Expenditure is revenue if incurred for operating a business to earn profit, even if an incidental enduring advantage results; it is capital if it creates an asset or an enduring advantage for the entire business structure.

Anupam Tele Services v. ITO
366 ITR 122 · 2014 · High Court
124
citing judgments

Section 40A(3) disallowances are not absolute; genuine and bonafide cash payments, where the payee's identity is established and business expediency is proven, fall outside its scope, as the section's purpose is to curb unaccounted money, not disallow genuine expenditure.

ACG Associated Capsule Private Limited v. Commissioner of Income Tax, Central IV, Mumbai
3 SCC 321 · 2022 · Reported
89
citing judgments

Profits of a business are computed under the head 'Profits and Gains of Business or Profession' and then reduced by specific receipts mentioned in Explanation (baa) to Section 80HHC. This means that for the purposes of Section 80HHC, only profits computed under the business head are considered, with subsequent adjustments for specified receipts.

Rayala Corporation Pvt. Ltd. v. ACIT
386 ITR 500 · 2016 · Supreme Court
89
citing judgments

If an assessee company's main business object is to acquire and rent out properties, the rental income derived is taxable as 'Profits and gains of business or profession', rather than 'Income from house property', as the nature of the activity constitutes a business.

Judgments citing profits and gains of business or profession

N C Shaw and Co Beverages Private Limited, Kolkata vs. Income Tax Officer, TDS Circle 2(2), Kolkata

In the result, the appeal filed by the assessee is allowed

ITA 1925/KOL/2024[2015-16]Status: DisposedITAT Kolkata27 Dec 2024AY 2015-16

Bench: Sri Pradip Kumar Choubey & Sri Rakesh Mishra

Section 194HSection 201Section 201(1)Section 250Section 271CSection 28

laid down in section 28(iv) of the Act, the following income shall be chargeable to income-tax under the head “Profits and gains of business or profession.” “[(iv) the value of any benefit or perquisite, whether convertible into money or not, arising from business or the exercise ... heads mentioned in the above table in a disguised nomenclature i.e., ‘Incentive’ partakes the nature of income under the head ‘Profits and gains of business or profession’ in the hands of the payee i.e., the customers/purchasers as a commission income received for rendering service to the assessee for boosting

Yuwam Education Pvt. Ltd., Jaipur vs. DCIT, Circle-6, Jaipur

ITA 1029/JPR/2024[2016-17]Status: DisposedITAT Jaipur20 Dec 2024AY 2016-17

Bench: SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member), SHRI NARINDER KUMAR (Judicial Member)

For Appellant: Sh. P. C. Parwal, CAFor Respondent: Mrs. Anita Rinesh, JCIT-Sr. DR
Section 115BSection 143(2)Section 143(3)

question arises whether the income subject matter of addition is chargeable to tax as per provisions of chapters on salary, profits and gains of business and profession Or capital gain Or income from house property Or income from other sources. If the same is chargeable to tax under these chapters ... opening sentence of the section 28 reads as under:- "The following income shall be chargeable to income-tax under the head "Profits and gains of business or profession", Accordingly, in case the appellant claims that the income is chargeable under the head business income and nowhere else, the onus

Deputy Commissioner of Income Tax, Central Circle-2, Ludhaina vs. Homeland City Project Ltd, New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 559/CHANDI/2024[2020-21]Status: DisposedITAT Chandigarh17 Dec 2024AY 2020-21

Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)

For Appellant: Shri Sudhir Sehgal, AdvocateFor Respondent: Shri Rohit Sharma, CIT DR
Section 143(1)Section 143(1)(a)Section 37

exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". Explanation 1.—For the removal of doubts, it is hereby declared that any expenditure incurred by an assessee for any purpose which

Shree Ram Cargo Private Limited, Pune vs. Income Tax Officer, Ward 6(5), Pune, Pmt Building, Shankar Shet Road

In the result, the appeal filed by the assessee is allowed

ITA 1568/PUN/2024[2015-16]Status: DisposedITAT Pune16 Dec 2024AY 2015-16

Bench: Dr.Manish Borad & Shri Vinay Bhamoreआयकर अपील सं. / Ita No.1568/Pun/2024 "नधा"रण वष" / Assessment Year : 2015-16 Shree Ram Cargo Private Limited, Vs. Ito, Ward-6(5), 3-A & B, Archies Court, Pune Shankar Shet Road, Pune 411 037 Maharashtra Pan : Aalcs3844A Appellant Respondent

For Appellant: Shri Nikhil MuthaFor Respondent: Shri Ajay Kumar Keshari
Section 143(2)Section 143(3)Section 250Section 40Section 40ASection 40A(3)

proviso which says as under :- “Provided that no disallowance shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3) and this sub-section where a payment or aggregate of payments made to a person ... allowed as a deduction. Clause (b) of sub-section (3) of section 40A also provides for deeming a payment as profits and gains of business or profession if the expenditure is incurred in a particular year but the payment is made in any subsequent year in a sum exceeding Rs.20

DCIT, Circle-1(1), Hyderabad vs. Prakash Nimmagadda, Hyderabad, Secunderabad

In the result, appeal filed by the Revenue is dismissed

ITA 974/HYD/2017[2008-09]Status: DisposedITAT Hyderabad16 Dec 2024AY 2008-09

Bench: Shri Vijay Pal Rao, Vice-A N D Shri Manjunatha, G.आ.अपी.सं /Ita No.974/Hyd/2017 (िनधा"रण वष"/Assessment Year: 2008-09) Dy.Cit Vs. Shri Prakash Nimmagadda Circle 1(1) Hyderabad Hyderabad Pan:Acbpn4246R (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Shri K.C. Devdas, Ca राज" व "ारा/Revenue By:: Dr. Meghnath Chowhan, Cit(Dr) सुनवाई की तारीख/Date Of Hearing: 06/11/2024 घोषणा की तारीख/Pronouncement: 16/12/2024 आदेश/Order Per Vijay Pal Raothis Appeal Filed By The Revenue Is Directed Against The Order, Dated 20/03/2017 Of The Learned Cit (A)-9, Hyderabad, Relating To A.Y.2008-09. 2. The Revenue Has Raised The Following Grounds:

For Appellant: Shri K.C. Devdas, CAFor Respondent: : Dr. Meghnath Chowhan, CIT(DR)
Section 17(2)(c)Section 28

under: “7. Section 28 sets out the incomes which are chargeable to income-tax under the head 'Profits and gains of business and profession', and clause (iv) thereto refers to "the value of any benefit or perquisite, whether convertible into money or not, arising from the business or exercise ... profession". It is thus clear that besides the profits and gains from business and profession carried on by the assessee at any time during the previous year, any other benefit or perquisite, whether Page 29 of 43 ITA No 974 of 2017 Prakash Nimmagadda convertible into money

Nikhil Sharma, Jaipur vs. ITO WD 1(3), Jaipur

In the result, the appeal of the assessee is allowed

ITA 1217/JPR/2024[2020-21]Status: DisposedITAT Jaipur16 Dec 2024AY 2020-21

Bench: Dr. S. Seethalakshmi & Shri Gagan Goyalnikhil Sharma, 6, Sangram Colony, C-Scheme, Jaipur–302001. Pan No.: Bijps 2623B ..... Appellant Vs. Ito,Ward-1(3), Jaipur – 302 001. ..... Respondent

For Appellant: Mr. Rajeev Sogani, CA, Ld. ARFor Respondent: Mr. Gautam Singh Choudhary, JCIT
Section 139Section 194HSection 201Section 250Section 40Section 9

contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession",— (a) in the case of any assessee— (ia) thirty per cent of any sum payable to a resident, on which

ACIT 32 1 Mumbai, Mumbai vs. Shubham Dynamic Real Estae Developers LLP, Mumbai

Accordingly the grounds raised by the revenue are dismissed

ITA 4476/MUM/2024[2017-18]Status: DisposedITAT Mumbai16 Dec 2024AY 2017-18

Bench: Shri Amit Shukla, Jm & Ms Padmavathy S, Am

For Appellant: Shri Rahul Hakani, ARFor Respondent: Shri Bhangepatil Pushkaraj
Section 143(1)Section 143(3)Section 147Section 148Section 148ASection 43C

assessed shall be deemed to be the full value of consideration for the purposes of computing income under the head profits and gains of business or profession. 15.1 In the case under consideration, the applicability of s. 43CA has been subject matter of controversy. In the present case, the undisputed

ACIT 14(1)(2), Mumbai vs. Bombay Footwear Private Limited, Mumbai

Accordingly, all the Grounds raised by the Revenue are dismissed

ITA 94/MUM/2024[2017-18]Status: DisposedITAT Mumbai12 Dec 2024AY 2017-18

Bench: SHRI NARENDRA KUMAR BILLAIYA, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY (Judicial Member)

For Appellant: Ms. Aarti Vissanji and Shri Ajay BhandariFor Respondent: Dr. Mahesh Akhade
Section 143(3)Section 250Section 263Section 270ASection 45Section 50D

Officer was of the view that the same were in the nature of business income liable to tax under the head ‘Profits and Gains of Business or Profession’. In appeal preferred by the Assessee, the CIT(A) overturned the aforesaid order of the Assessing Officer and accepted the Assessee

Empire Multitrade Private Limited, Mumbai vs. DCIT-12(2)(1), Aaykar Bhavan Mumbai

In the result, appeal filed by the assessee stands allowed

ITA 1363/MUM/2024[2014-15]Status: DisposedITAT Mumbai12 Dec 2024AY 2014-15

Bench: Smt Beena Pillaiassessment Year: 2014-15 Empire Multitrade Dcit- 12(2)(1) Private Limited Room No. 642, A/4, Chandrika Chs 6Th Floor, Ltd., Aaykar Bhavan Vs. Shankar Lane, Maharishi Karve Road, Kandivali (W.), Mumbai- 400020. Mumbai- 400067. Pan: Aabce0444J Appellant : Respondent

For Appellant: RespondentFor Respondent: Ms. Pradnya Gholap (Sr. DR)
Section 142Section 143Section 143(2)Section 250

relevant provisions for deciding this appeal are extracted as under: Definitions of certain terms relevant to income from profits and gains of business or profession. 43. In sections 28 to 41 and in this section, unless the context otherwise requires— …………. (5) "speculative transaction" means a transaction in which a contract

Allcargo Gati Limited(Formally Known As Gati Limited), Hyderabad vs. ITO, Ward-2(2), Hyd, Hyderabad

In the result, the appeal of assessee in ITA

ITA 190/HYD/2016[2010-11]Status: DisposedITAT Hyderabad10 Dec 2024AY 2010-11

Bench: Shri Laliet Kumar & Shri Madhusudan Sawdia

For Appellant: Shri Madhur Agarwal, AdvocateFor Respondent: Ms. K. Haritha, CIT-DR
Section 36(1)(iii)Section 37Section 37(1)

exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". 17. From the reading of Section 37(1) of the Act, it is clear that the expenditure which is incurred wholly and exclusively ... expenditure not being in the nature of capital expenditure shall be allowed and computed the income chargeable under head Profits and gains of business or profession. In the present case, admittedly, the assessee had sought the deduction of amount which was received by the assessee for the purpose of expansion

Allcargo Gati Limited(Formally Known As Gati Limited), Hyderabad vs. ACIT, Circle-2(2) Hyderabad, Hyderabad

In the result, the appeal of assessee in ITA

ITA 1721/HYD/2016[2012-13]Status: DisposedITAT Hyderabad10 Dec 2024AY 2012-13

Bench: Shri Laliet Kumar & Shri Madhusudan Sawdia

For Appellant: Shri Madhur Agarwal, AdvocateFor Respondent: Ms. K. Haritha, CIT-DR
Section 36(1)(iii)Section 37Section 37(1)

exclusively for the purposes of the business or profession shall be allowed in computing the income chargeable under the head "Profits and gains of business or profession". 17. From the reading of Section 37(1) of the Act, it is clear that the expenditure which is incurred wholly and exclusively ... expenditure not being in the nature of capital expenditure shall be allowed and computed the income chargeable under head Profits and gains of business or profession. In the present case, admittedly, the assessee had sought the deduction of amount which was received by the assessee for the purpose of expansion

Ncgb Retrofit Pvt. Ltd., Kolkata vs. D.C.I.T., Circle - 11(1), Kolkata

In the result, the appeal of the assessee is allowed, subject to the verification as mentioned

ITA 1511/KOL/2024[2023-2024]Status: DisposedITAT Kolkata06 Dec 2024AY 2023-2024

Bench: Shri Sonjoy Sarma & Shri Rakesh Mishraassessment Year: 2023-24 Ncgb Retrofit Pvt. Ltd. Dcit, Circle-11(1), Kolkata 3A, St. George Terrace, Vs Aaykar Bhavan, P-7, Kolkata-700022, West Bengal Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) Pan: Aaacn8752B Present For: Appellant By : Shri Anup Singh, Ar Respondent By : Shri Supriya Pal, Dr Date Of Hearing : 24.09.2024 Date Of Pronouncement : 06.12.2024 O R D E R Per Rakesh Mishra: This Appeal Filed By The Assessee Is Against The Order Of The Ld. Addl/Jcit(A)-12, Mumbai (Hereinafter Referred To As “The Ld. Addl/ Jt. Cit (A)” ) Passed U/S 250 Of The Income Tax Act, 1961 (Hereinafter Referred To As “The Act”) For Ay 2023-24 Dated 22.05.2024, Which Has Been Passed Against The Intimation U/S 143(1) Of The Act Issued By The Cpc, Bengaluru.

For Appellant: Shri Anup Singh, ARFor Respondent: Shri Supriya Pal, DR
Section 139(1)Section 143(1)Section 154Section 234BSection 250

brief facts of the case are that the assessee NCGB Retrofit Private Limited (PAN AAACN87518) was having income under the head Profits and Gains of Business or Profession during the financial year 2022-23. The assessee filed its original return of income for Asst Year 2023-24 on 13th October

ACIT Central Circle, Ghaziabad vs. A1-Dua Food Processing Private Limited, New Delhi

In the result, the appeal filed by the Revenue is dismissed

ITA 1007/DEL/2023[2017-18]Status: DisposedITAT Delhi06 Dec 2024AY 2017-18

Bench: Shri S.Rifaur Rahman & Shri Sudhir Pareekacit, Central Circle, Vs. Al-Dua Food Processing Pvt. Ltd., Ghaziabad. 16, Fire Brigade Lane, Connaught Place, New Delhi – 110 001. (Pan : Aagca0396J) (Appellant) (Respondent) Assessee By : Shri Deepak Singh, Advocate Revenue By : Shri Javed Akhtar, Citdr Date Of Hearing : 25.09.2024 Date Of Order : 06.12.2024 O R D E R Per S. Rifaur Rahman,Am: 1. This Appeal Is Filed By The Assessee Against The Order Of Ld. Commissioner Of Income-Tax (Appeals)-4, Kanpur [Hereinafter Referred To ‘Ld. Cit (A)’] Dated 25.01.2023 For Assessment Year 2017-18. 2. Brief Facts Of The Case Are, Assessee Filed Its Return Of Income Declaring Total Income Of Rs.8,76,98,220/- On 30.11.2017. The Return Was Processed U/S 143(1) Of The Income-Tax Act, 1961 (For Short ‘The Act’). The Case Was Selected For Scrutiny Under Cass & Statutory Notices

For Appellant: Shri Deepak Singh, AdvocateFor Respondent: Shri Javed Akhtar, CITDR
Section 143(1)Section 143(2)Section 145Section 40A(3)

disallowance under sub-section (3) of section 40A shall be made and no payment shall be deemed to be the profits and gains of business or profession under sub-section (3A) of section 40A where a payment or aggregate of payments made to a person in a day, otherwise than

Baba Akhila Sai Jyothi Industries Private Limited, Hyderabad vs. DCIT., Circle-1(1), Hyderabad

In the result, appeal filed by the assessee is allowed

ITA 987/HYD/2024[2018-19]Status: HeardITAT Hyderabad05 Dec 2024AY 2018-19

Bench: Shri Vijay Pal Rao, Vice-A N D Shri Manjunatha, G.आ.अपी.सं /Ita No.987/Hyd/2024 (िनधा"रण वष"/Assessment Year: 2018-19) Baba Akhila Sai Jyothi Vs. Dy. Cit Industries Private Ltd Circle 1 ( 1 ) Hyderabad Hyderabad Pan:Aadcb3413C (Appellant) (Respondent) िनधा""रती "ारा/Assessee By: Advocate A.V. Raghuram राज" व "ारा/Revenue By:: Shri Srinath Sadanala, Dr सुनवाई की तारीख/Date Of Hearing: 02/12/2024 घोषणा की तारीख/Pronouncement: 05/12/2024 आदेश/Order Per Vijay Pal Raothis Appeal Filed By The Assessee Is Directed Against The Order Dated, 6/8/2024 Of The Learned Cit (A)-Nfac Delhi, Relating To A.Y.2018-19. 2. The Assessee Has Raised The Following Grounds: “1. On The Facts & In The Circumstances Of The Case, The Order Of The Learned Cit (A) Is Erroneous Both On Facts & In Law. 2. The Learned Cit (A) Erred In Sustaining The Penalty Of Rs.5,80,424/- Levied By The Assessing Officer U/S 270A Of The I.T. Act, 1961. Page 1 Of 8

For Appellant: Advocate A.V. RaghuramFor Respondent: : Shri Srinath Sadanala, DR
Section 270ASection 270A(6)Section 40A(7)

Baba Akhila Sai Jyothi Industries P Ltd total income and brought to tax under the head “Profits and Gains of Business or Profession”. Addition: Rs.9,30,140/-“ 6. Thus, it is clear that the Assessing Officer noted this fact from the audit report of the assessee itself wherein the Auditor

Idfc Financial Holding Company Limited, Chennai vs. DCIT, Corporate Circle-2(2), Hennai

In the result, appeal filed by the assessee is partly allowed

ITA 241/CHNY/2024[2019-20]Status: DisposedITAT Chennai04 Dec 2024AY 2019-20

Bench: Shri Aby T. Varkey & Shri Manoj Kumar Aggarwal

For Appellant: Mr.Ketan K. Ved, CAFor Respondent: Ms.R. Anita, Addl.CIT
Section 115JSection 143(1)Section 234C

nature referred to in sub-clause (ix) of clause (24) of section 2; [or] [(c) income under the head "Profits and gains of business or profession" in cases where the income accrues or arises under the said head for the [first time; or]] [(d) the amount of dividend income

DCIT, Mumbai vs. Icici Prudential Life Insurance Limited, Mumbai

ITA 3003/MUM/2024[2021-22]Status: DisposedITAT Mumbai04 Dec 2024AY 2021-22
For Appellant: Ms. Arati VissanjiFor Respondent: Ms. Madhu Malati Ghosh
Section 10Section 10(15)Section 10(34)Section 143(3)Section 144BSection 14ASection 28Section 44

relating to computation of income chargeable under different heads, other than the income to be computed under the head "Profits and gains of business or profession". For computation of profits and gains of business or profession the mandate to the Assessing Officer is to compute the said income in accordance

Deputy Commissioner of Income Tax, Central Circle 6(2), Mumbai. vs. Icici Prudential Life Insurance Limited, Mumbai

ITA 2384/MUM/2024[2020-21]Status: DisposedITAT Mumbai04 Dec 2024AY 2020-21
Section 10Section 10(15)Section 10(34)Section 143(3)Section 144BSection 14ASection 28Section 44

relating to computation of income chargeable under different heads, other than the income to be computed under the head "Profits and gains of business or profession". For computation of profits and gains of business or profession the mandate to the Assessing Officer is to compute the said income in accordance

Deputy Commissioner of Income Tax, Circle, Patiala vs. Punjab State Power Corporation Limited, Patiala

In the result, both the appeals filed by the Revenue are partly allowed

ITA 659/CHANDI/2023[2012-13]Status: DisposedITAT Chandigarh28 Nov 2024AY 2012-13

Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)

For Appellant: Shri Rajiv Saldi, C.AFor Respondent: Smt. Kusum Bansal, CIT, DR
Section 36(1)(va)Section 43B

referred to in section 80CCD shall be allowed as deduction in computing the income of the employer under the head "Profits and gains of business or profession", to the extent it does not exceed ten per cent, of the salary of the employee in the previous year. 10.5 Section ... contribution as an employer towards NPS w.e.f 1-04-2012 as a deduction while computing its income under the head “Profits and gains from business or profession”. However, there is a restriction on the quantum of such contribution which can be claimed and which has been restricted by the statue

Deputy Commissioner of Income Tax, Circle, Patiala vs. Punjab State Power Corporation Limited, Patiala

In the result, both the appeals filed by the Revenue are partly allowed

ITA 645/CHANDI/2023[2013-14]Status: DisposedITAT Chandigarh28 Nov 2024AY 2013-14

Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)

For Appellant: Shri Rajiv Saldi, C.AFor Respondent: Smt. Kusum Bansal, CIT, DR
Section 36(1)(va)Section 43B

referred to in section 80CCD shall be allowed as deduction in computing the income of the employer under the head "Profits and gains of business or profession", to the extent it does not exceed ten per cent, of the salary of the employee in the previous year. 10.5 Section ... contribution as an employer towards NPS w.e.f 1-04-2012 as a deduction while computing its income under the head “Profits and gains from business or profession”. However, there is a restriction on the quantum of such contribution which can be claimed and which has been restricted by the statue

Vidharbha Konkan Gramin Bank, Nagpur vs. Income Tax Officer Ward 1(5), Nagpur

In the result, appeal filed by the assessee for A

ITA 8/NAG/2019[2015-2016]Status: DisposedITAT Nagpur28 Nov 2024AY 2015-2016

Bench: Shri V. Durga Rao & Shri K.M. Roy, Accountant, Member

For Appellant: Shri C. NareshFor Respondent: Shri Sandipkumar Salunke
Section 22Section 36(1)Section 36(1)(viia)Section 36(1)(viii)Section 80P

specified entity, an amount not exceeding twenty per cent of the profits derived from eligible business computed under the head "Profits and gains of business or profession" (before making any deduction under this clause) carried to such reserve account: Provided that where the aggregate of the amounts carried to such ... said section provides a deduction not exceeding 20% of the profits derived from eligible business computed under the head 'Profits and gains of business or profession', in respect of any special reserve created and maintained by a specified entity and the said amount having been carried to such reserve account