Block assessment deductions under sections 80-I and 80-IA remain available for undisclosed income absent express statutory exclusion.

In block assessment proceedings, undisclosed income computed under sections 158BB and 158BH is not, by itself, excluded from Chapter VI-A relief. Where the Act does not expressly bar such relief and section 158BH makes the other provisions of the Income-tax Act applicable, eligible deductions under sections 80-I or 80-IA may be claimed subject to compliance with the statutory conditions. The legal effect is that deduction cannot be denied merely because the income is assessed as undisclosed income in a block period.

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Issues: Whether, in a block assessment, deduction under sections 80-I or 80-IA could be claimed in relation to undisclosed income computed under sections 158BB and 158BH of the Income-tax Act, 1961.

Analysis: The amended provisions of section 158BB, given retrospective effect from 01.07.1995, were read along with section 158BH, which makes the other provisions of the Act applicable to block assessments. The Court accepted that while the computation of undisclosed income is to be made in the manner prescribed for block assessment, there is no express exclusion of Chapter VI-A deductions. The Court therefore upheld the Tribunal's view that, subject to compliance with the statutory requirements, the assessee could not be denied deduction under sections 80-I or 80-IA merely because the income formed part of block assessment undisclosed income.

Conclusion: The assessee was entitled to claim deduction under sections 80-I or 80-IA on the undisclosed income assessed in the block period.

Ratio Decidendi: In block assessment proceedings, where the statute does not expressly exclude Chapter VI-A relief and section 158BH applies the remaining provisions of the Act, eligible deduction under sections 80-I or 80-IA cannot be denied solely because the income is assessed as undisclosed income.

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