Smallness of profit, the Legislature has deliberately used the expression 'smallness of profit' and not 'smallness of assessable income' and there is noth-ing in the context in which the expression 'small-ness of profit' occurs which justifies equation of the expression 'profit' with 'assessable income.' Smallness of the profit in s. 23A has to be adjudged in the light of commercial principles and not in
the light of total receipts, actual or fictional, Commissioner of Income Tax v. Bipinchandra Maganlal and Co., AIR 1961 SC 1040 (1043): (1961) 2 SCR 493.
(ii) The words 'smallness of profit' in the s. 23 of the Income Tax Act, 1922 refer to actual accounting profits in comparison with the assessable profits of the year. In arriving at the assessable profits the Income-tax Officer may disallow many expenses actually incurred by the assessee; and in computing his income, he may include many items on notional basis. But the commercial or accounting profits are the actual profits earned by an assessee calculated on commercial principles, CIT v. Gangadhar Banerjee and Co. (P) Ltd., AIR 1965 SC 1977: (1965) 3 SCR 439.
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