TaxTMI 
TaxTMI 
2013 (2) TMI 68
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....oject" eligible for deduction u/s.80IB(10) of the I.T. Act, when the total income under the head "income from business" is computed as per provisions of Income Tax Act. 2. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in holding that the "profit derived in the case of an undertaking developing and building housing project" eligible for deduction u/s. 80IB(10) includes addition on account of disallowance of expenditure as per provisions of sec. 40(a)(ia) of the I.T.Act. 3. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in holding that the addition made by the Assessing Officer on account of disallowance of expendit....
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....I have given careful consideration to the contents of the assessment order and to the submissions of the learned AR of the Appellant and have also carefully perused the relevant provisions of law. The general conditions for claiming deduction under section 80IB are as follows: (i) the Appellant has a 'gross total income' for the year (ii) such gross total income includes 'profits and gains from business' (iii) such profits and gains are 'derived from' business (iv) such business from which the profits and gains are derived is one of the eligible businesses specified u....
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....in my view, to examine the language of the provision under which the addition was made, namely, section 40(a)(ia). The language of the said provision as it stood at the relevant time is reproduced below: "Amounts not deductible. 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession", - (a) In the case of any assessee - (i).... (ia) any interest, commission or brokerage, rent,....
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....ve the same meaning as in clause (a) of the Explanation to section 194J; (iv) "work" shall have the same meaning as in Explanation III to section 194C; (v) "rent" shall have the same meaning as in clause (i) to the Explanation to section 194-I; (vi) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; 10. Upon a plain reading of the provision, it is clear that upon violation of the conditions specified under clause (ia) the implication under section 40(a) would be that....
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....le business. Under the circumstances, if it is to be held that the income representing the amount of addition made on account of disallowance under section 40 is not derived from the eligible business then what other activity was the said income derived from? In order to have an income there must be a source. As such, any addition made to the business income went to increase the business profit but such business profit being fully exempt under the provisions of section 80IB(10), the additional amount too was eligible to claim deduction and could not be taxed separately in the Appellant's hands as an income without any source. 11. Accordingly, this ground of appeal is allowed and the addition made is hereby deleted." 3. ....