2012 (9) TMI 977

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....Ld.CIT(A) has erred in law and on facts and in law in allowing the deduction u/s.80IB of the Act on the disclosed income of Rs. 50,00,000/- treating the same as income from business activity of the assessee.   2. Rest of the grounds revolve around the main issue and, hence, these grounds are argumentative in nature. 3. Facts in brief as emerged from the corresponding assessment order above u/s.143(3) dated 26.12.2008 were that the assessee-firm is engaged in construction. It was informed during the assessment proceedings that the assessee has developed a residential property. A survey u/s.133A was carried out at the business premises of the firm on 27.12.06. Simultaneously, a search was also conducted u/s.132 of the I.T.Act. A....

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....he total income of the assessee, treating the same as unaccounted income admitted during the course of search by Shri Mahendra Kataria in the case of the assessee firm. From the books of account and other material available on record, the total income of the assessee from its business activity is to the extent of Rs. 31,83,559/- in which the deduction can be allowable u/s.80IB of the I.T.Act to the assessee. Penalty proceedings u/s.271(1)(c) of the I.T.Act have been initiated on this issue for concealment of income by way of furnishing inaccurate particulars of income." 4. When the matter was carried before the first appellate authority, it was pleaded that the assessee had no other source of income except the said housing project whi....

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....come. b) The only source of income derived by the appellant firm was from the approved project of developing and building housing project which was eligible for grant of deduction u/s.80IB. The AO has himself accepted the eligibility of the appellant firm for grant of such deduction u/s.80IB on the entire income except on the additional income so disclosed during search and in the return. The appellant firm had no other source of income in the relevant year except carrying out the approved housing project eligible for grant of deduction u/s.80IB. c) As per decision of Debi Burman vs. CIT, (1994) Tax LR 452, 457 (Cal.), the Addition made on the ground of receipt of extra sale consideration from the buyers of the flats constructed by th....

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....ted to the regular business of the assessee, therefore the Assessing Officer has rightly disallowed the claim of deduction u/s.80IB(10) of the I.T.Act. 6. From the side of the assessee, ld.AR Mr.S.N.Soparkar appeared and placed reliance on two judgements; (i) CIT vs. M/s. Sheth Developers (P) Ltd. in Income Tax Appeal No.3724 of 2010 dated 27/07/2012 [The High Court of Judicature at Bombay] and (ii) Asst.CIT vs. Sri Prabhudas Shantilal Parekh in ITA No.2408/Ahd/1993 (A.Y. 1991-92) dated 15.12.1999 [ITAT Rajkot Bench, Rajkot] 7. We have heard both the sides. We have also perused the impugned statement of Mr.Mahendra Kataria recorded on 27/28.12.2006.   In reply to a question, it was categorically stated, quote "(i)Rs.50,0....