Capitalised expenditure, enhanced depreciation, and housing project deduction were all resolved in the assessee's favour.

Section 40(a)(i) could not be invoked because the payment was capitalised in work-in-progress and was not claimed as a revenue deduction; the disallowance was deleted. Enhanced depreciation was allowable on a Honda motor car treated as a light motor vehicle falling within the commercial vehicle entry; the matter was remitted for recomputation. Deduction under section 80IB(10) could not be denied merely for absence of a formal completion certificate where the housing project was otherwise completed, the assessee had applied for certification, and the local authority neither refused nor objected; the deduction was upheld.

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Issues: (i) Whether the disallowance made under section 40(a)(i) was sustainable in respect of a payment capitalised in work-in-progress and not claimed as a revenue deduction; (ii) Whether depreciation at the enhanced rate was allowable on a Honda motor car treated as a light motor vehicle falling within the expression commercial vehicle; (iii) Whether deduction under section 80IB(10) could be denied for want of a formal completion certificate where the housing project was otherwise completed and the local authority had not refused the application.

Issue (i): Whether the disallowance made under section 40(a)(i) was sustainable in respect of a payment capitalised in work-in-progress and not claimed as a revenue deduction?

Analysis: Section 40(a)(i) applies only to amounts sought to be deducted in computing income under the head profits and gains of business or profession. The payment in question was not debited to the profit and loss account and stood capitalised in work-in-progress. As the amount was not claimed as a deductible revenue expenditure, the statutory condition for invoking section 40(a)(i) was absent.

Conclusion: The disallowance was not sustainable and the addition was deleted in favour of the assessee.

Issue (ii): Whether depreciation at the enhanced rate was allowable on a Honda motor car treated as a light motor vehicle falling within the expression commercial vehicle?

Analysis: The depreciation table in the Income-tax Rules permits enhanced depreciation for new commercial vehicles, and the relevant notes link the expression commercial vehicle to a light motor vehicle as understood under the Motor Vehicles Act, 1988. On that reading, the vehicle answered the description of a light motor vehicle and was covered by the enhanced depreciation entry, subject to other statutory conditions.

Conclusion: Enhanced depreciation was allowable and the matter was restored for recomputation in favour of the assessee.

Issue (iii): Whether deduction under section 80IB(10) could be denied for want of a formal completion certificate where the housing project was otherwise completed and the local authority had not refused the application?

Analysis: Explanation (ii) links completion to issuance of a completion certificate by the local authority, but the facts showed that the assessee had completed the project, applied for the requisite certificate with supporting documents, and received no objection or refusal from the municipal authority. The decision proceeded on the principle of substantial compliance and the deemed completion approach recognised in the applicable local development rules and judicial precedent.

Conclusion: The deduction under section 80IB(10) was rightly allowed and the Revenue's objection failed.

Final Conclusion: The assessee succeeded on all substantive issues, the addition under section 40(a)(i) was deleted, enhanced depreciation was directed to be recomputed, and the deduction under section 80IB(10) was upheld.

Ratio Decidendi: Section 40(a)(i) cannot be invoked unless the impugned amount is claimed as a deductible business expenditure, and for housing project deduction the absence of a formal completion certificate will not defeat relief where completion is otherwise established and the local authority has not rejected the application on completion grounds.

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