2013 (1) TMI 208

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....ux of the issues is concisely expressed herein below:- (1)  The learned CIT (A) erred in allowing deduction u/s 80- IB (10) of the Act. (2)  The learned CIT(A) erred in allowing deduction u/s 80-IB (10) of the Act on the addition made u/s 40 (a)(ia) of the Act, without appreciating the fact that the addition was not on account of disallowance of any expenditure but on account of infringement of law. 3. The assessee is an individual deriving income as partner in firm and also from other sources filed his return of income on 30-12-2006 declaring total income of Rs.8,86,240/-. Subsequently, the case was selected for scrutiny assessment and the assessment u/s 143(3) was completed on 26-12-2008 wherein the learned AO did not g....

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....oor has area of (i) 6.50 x 3.085 sq. meters, (ii) 6.50 x 2.915 sq. meters, (iii) 6.50 x 2.915 sq. meters and (iv) 6.50 x 3.085 sq. meters aggregating to 78 sq. meters which is approximately 2% of the built-up area. Further the Revenue has not produced any materials before us to substantiate its claim. In these circumstances we are inclined not to interfere with the order of the learned CIT(A). Accordingly this ground of the Revenue is dismissed. 7. Ground No.2: Allowing deduction u/s 80-IB (10) of the Act on the addition made u/s 40(a)(ia) of the Act, without appreciating the fact that the addition was not on account of disallowance of any expenditure but on account of infringement of law:- It was observed by the learned AO that the asse....

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....visions of the Act. In this case, the addition made on account of disallowance of expenditure is due to the deeming fiction created by the penal section 40(a)(ia) of the Act. Thus, the effect of the same cannot be imported into a beneficial provision vis-a-vis section 80-IB(10) of the Act. While computing deduction u/s 80-IB (10) of the Act, the plain meaning of the language of the Act has to be given effect. The legal fiction created by virtue of section 40(a)(ia) cannot be extended to determine the profit of the business for the purpose of computing deduction u/s 80-IB(10) of the Act. Section 80-IB(10) of the Act has to be applied only for the definite and limited purpose for which it is created. In the case of Executors & Trustees of Sir....