2009 (10) TMI 544

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....ial Undertaking and thus eligible for deduction under Section 80 IB as the Assessing Officer had not specifically proved that the income was not from the Business and Profession? 2. Whether on the facts and in the circumstances of the case the Hon'ble ITAT was right in law holding that 100% deduction under Section 80 IB was allowable to the assessee on the surrendered income whereas the assessee surrendered the income of Rs.2,50,000/- on account of unaccounted expenses and also undertook to pay the tax on the surrendered income. This incomes could be taxed only under Section 69(C) of the Act under the head 'Income from other sources' and there was no question of it being taxed as 'Income from Business' and much less as derived from the b....

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....ssee-firm's general power of attorney Shri A.K.Mahajan, who explained that being new machinery in M/s Allied Industries, no expenses have been borne for repair and maintenance and other expenses have been debited on actual basis. Further he offered a sum of Rs.2,50,000/- for taxation to cover up all types of discrepancies and also this amount will include disallowance on account of late payment of ESI. This offer has been made subject to no penalty under Section 271(1)(c) of the I.T.Act. Accordingly, a sum of Rs.2,50,000/- is added to the taxable income of the assessee-firm." The Assessing Officer added this income to the income of the assessee but did not permit the assessee to claim deduction of this income under Section 80-IB. The ass....

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...., learned counsel for the Revenue, i.e. Kedar Nath Modi vs. Commissioner of Income-tax, 1993 (Vol.200), ITR page 685 has no applicability to the present case since in that case there was unexplained expenditure which is not there in the present case. The addition of Rs.2,50,000/- was made to the income of the business itself. Therefore, it will have to be deemed to be income from the business of the Company. If it is income derived from the business then such income is to be considered while working out the deduction allowable under Section 80-IB of the Act. There is no finding of any authority that the income was derived from any other undisclosed source. The addition was made to the income of the assessee and had been assessed under the h....