Business receipt treatment for survey-disclosed flat sale consideration confirmed as income from the same construction activity.

Additional consideration disclosed during survey from flat sales in a housing project was treated as business income because the assessee was engaged only in construction, the amount arose from the same business activity recorded in the profit and loss account, and no separate source of income existed. The disclosure therefore retained the character of trading receipt and could not be assessed as deemed or unexplained income under section 69. As it formed part of the business profits, it was also relevant in computing book profit for section 40(b), entitling the assessee to that benefit.

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Issues: Whether the additional income declared during survey from sale of flats in a housing project was business income/trading receipt or income from other sources/unexplained income, and whether it formed part of book profit eligible for deduction under section 40(b).

Analysis: The assessee was engaged only in construction activity and the amount declared during survey represented extra consideration received from customers over and above the agreement value for sale of built-up area. The income was disclosed from the same business activity reflected in the profit and loss account, and there was no separate source of income. On these facts, the disclosed amount retained the character of business receipt and could not be treated as deemed income under section 69. Since it was attributable to the business and included in the business profits, it was relevant for computing book profit for section 40(b).

Conclusion: The additional income was held to be business income and not income from other sources or unexplained income, and the assessee was entitled to the benefit of section 40(b).

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