2009 (4) TMI 471

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.... nuts from raw cashews which was exported and was also sold in the domestic market. The return for the assessment year 2003-04 was filed on October 30, 2003, showing total income of Rs. 18,98,289. In the assessment order passed under section 143(3) on March 31, 2006, the total income was assessed at Rs. 30,36,994 as under: ------------------------------------------------------------         Particulars               Amount (Rs.)  Amount (Rs.) ------------------------------------------------------------ Income as per return                &nbs....

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....al income                                     30,36,994 ------------------------------------------------------------ The Commissioner of Income-tax (Appeals) allowed part relief and his order has been challenged by the assessee in the present appeal. Ground No. 1. 1. The learned Commissioner of Income-tax (Appeals) erred in holding that the sum disallowed by the Assessing Officer under section 40A(3) of Rs. 4,54,049 in respect of cash payments is only a deemed income and hence not entitled to deduction under section 80-IA. However in respect of section....

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....alia, noted that the income base with reference to the computation of relief under section 80-IA has not been specified in the Act, that the income base for the purpose of computing eligible relief under section 80-IA has to be taken as commercial profits computed as per the profit and loss account, that the disallowance in terms of section 40A(3) will create only deemed income and the same would not affect the computation of relief under section 80-IA He placed reliance in this respect on the ratio laid down by the Madras High Court in the case of Carborandum Universal Ltd. v. CIT [2004] 265 ITR 372. His order has been challenged by the assessee in the present appeal. We have considered the rival submissions in the light of material on ....

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.... provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under the head 'Profits and gains of business or profession'. (3) Where the assessee incurs any expenditure in respect of which payment is made, after such date (not being later than the 31st day of March, 1969) as may be specified in this behalf by the Central Government by notification in the Official Gazette, in a sum exceeding twenty thousand rupees otherwise than by a crossed cheque drawn on a bank or by a crossed bank draft, twenty per cent. of such expenditure shall not be allowed as a deduction." The legal position stated above can be expanded a little further....