2016 (4) TMI 858

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....ent year 2007-08 on 22/10/2007 declaring total income of Rs. 2,81,953/- after claiming deduction of Rs. 2,52,97,456/- under section 80IB(10) of the Income Tax Act, 1961( in short 'the Act'). The return was processed under section 143(3) of the Act and the case was taken up for scrutiny. The assessment was completed under section 143(3) of the Act vide order dated 14/12/2009, wherein the income of the assessee was determined at Rs. 2,64,05,160/- in view of the following additions/disallowances:- (i) Disallowance of deduction u/s.80IB(10) - Rs.2,52,97,456/- (ii) Disallowance of compensation - Rs. 8,85,750/-   2.2 Aggrieved by the order of assessment for assessment year 2007- 08 dated 14/12/2009, the assessee....

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....f business income which was determined at Rs. 2,64,65,160/- by the Assessing Officer's order dated 5/01/2011. 3.1 Aggrieved by the order of the CIT(Appeals)-26, Mumbai dated 30/01/2013 for assessment year 2007-08, the assessee has preferred this appeal raising the following grounds:- "1. BECAUSE, the ld. CIT(A) has erred in law and on facts in restricting the claim of 100% tax exemption to Rs. 2,55,90,033/- instead of Rs. 264,65,160/- being income determined by the Assessing Officer in original assessment order. 2. BECAUSE, the ld. CIT(A) has failed to: i. properly observe the finding and direction issued by the Ld. CIT(A) in his appeal order for AY 2007-08; ii. to deal with the submissions filed by th....

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....ival contentions and perused the material on record including the judicial pronouncements cited and placed reliance. From the details on record it is not disputed that the assessee is entitled to be allowed deduction under section 80 IB(10) in respect of its business income derived from its building, construction and development activities from the earlier assessment year 2006-07 itself. We find from a perusal of the decision of the Co-ordinate Bench in the case of M/s. Meha Medicure in ITA No.3420/Mum/2011 dated 02/03/2012 that the assessee would be entitled to enhanced deduction under section 80 IB(10) of the Act to the extent the assessed business income of the assessee is enhanced by virtue of disallowances that go to enhance its profit....

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....Section 40 is a non-obstante clause which places embargo on the allowability of expenses / expenditure from section 30 to 38. Therefore, any disallowance u/s.40(a)(ia) will go to enhance the profit of the assessee from the eligible business. This preposition of law is now squarely covered by the decision of the ITAT, Mumbai 'E' Bench in the case of S.B. Builders & Developers v. ITO (supra) wherein it was observed and held as under : "Held : Under section 80AB the income that is derived from the eligible business must be computed in accordance with the provisions of sections 30 to 43D, as provided in section 29. Section 29 provides that the income chargeable to tax under the head "profits and gains of business" "shall be computed in....

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....n time. It is part of the provisions for computation of the profits. Sec.80AB advisedly uses the expression "... the amount of income of that nature as computed in accordance with the provisions of this Act....". The section would have been differently worded if the contention of the Revenue is to be accepted. One would be ignoring the mandate of s.80AB r/w s. 29 it one accepts the stand of the Revenue. There is no authority given by these sections to ignore the effect of s.40(a)(ia). Those sections do not say that the assessee will be allowed all the deductions from the profits, but when it comes to disallowing certain claims to expenditure somehow, those provisions will have to be ignored. While giving effect to the computation provisions....