TaxTMI 
TaxTMI 
2017 (10) TMI 922
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....re totally unrelated to the issue in appeal. (3) The learned Commissioner of Income-tax (Appeals) ought to have deleted interest charged u/s.234A, 234B and 234C of the Act." 3. Brief facts of the case is that assesee has filed return of income on 30.09.2010 declaring total income of Rs. Nil. The assessee firm was engaged in the business of developing and construction work. During the year under consideration the assessee firm has constructed a project in the name and style of Laxmi Residential at Katargram, Surat. A survey u/s. 133A of the act was carried out on 8th October, 09 in the case of the assessee. Thereafter, the caseof the assessee was selected for scrutiny under compulsory category. Subsequently, a notice u/s. 143(2) of the act was issued on 24th August, 2011. During the year under consideration, the assessee firm has shown gross receipt of Rs. 6,82,01,0001/- and shown profit of Rs. 4,66,26,777/- on which deduction u/s. 80IB(10) of the act was claimed. The assessing officer observed that the assessee failed to prove the genuineness of undisclosed income of Rs. 1.1crores earned from 80IB projects disclosed at the time of survey u/s.133A The assessing officer h....
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....ular books of accounts of the appellant. The appellant contented that the amount received as 'on money' was surrendered during the survey proceedings and is a part of business income and eligible for deduction u/s 80IB of the Act. The appellant failed to furnish any confirmatory letters from the purchasers regarding the payment of 'on money' for the purchase of flat over and above the registered sale value. The stamp value for the registration of the property has also not included this 'on money'. The appellant was not able to adduce any evidence to show that the 'on-money' was utilized in the business. Since, no evidence has been provided regarding the 'on money' being part of the business income, the receipts has been rightly taxed as income from other sources u/s 56 of the Act. This amount has been obtained by the appellant and no connection or relation to the business could be proved. The object of section 80IB(10) is to provide for "Affordable Housing" to the people at a reasonable price for which tax incentive has been provided to the builders/developers. The appellant has violated the statutory objective by taking "on money" illegally ....
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....ercial loss falling on the assessee as a trader the test being that the expenses which are for the purpose of enabling a person to carry on trade for making profits in the business are permitted but not if they are merely connected with the business. No expense which is paid by way of penalty for a oreach of the law can be said to be an amount wholly and exclusively laid for the purpose of the business. The distinction sought to be drawn between a personal liability and a liability of the kind in question was not sustainable because anything done which is an infraction of the law and is visited with a penalty cannot on grounds of public policy be said to be a commercial I expense for the purpose of a business or a disbursement made for the purposes of earning the profits of such business. Similar view has been expressed in the case Haji Aziz and Abdul Shakoor Bros, 41 ITR 350 (SC) 6.2.3 Payments tainted with illegality cannot be claimed as deduction under the Act. Moreover, an assessee is penalized under one Act, he cannot claim that amount to be set off against his income under another Act, because that will be frustrating the entire object of imposition of penalty. One e....
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.... deduction of a particular amount under section 37(1) of the Income-tax Act, 1961, the payment need not necessarily be mandatory or statutory; even a voluntary payment made, so long as it is made in the interest of the assessee's business, is entitled to be deducted as business expenditure. However, the assessees would not be entitled to deduction of contributions or payments made in contravention of law or which are opposed to public policy. Infraction of law is not a normal incident of the business. Similarly, payments whtcrrare" opposed to public policy being in the nature of unlawful consideration for discharging an official duty otherwise than according to law, i.e., otherwise than on merits, cannot equally be recognized. It would be shortsighted to hold that businessmen are entitled to conduct their business even contrary to law and claim deductions of payments as business expenditure, notwithstanding that such payments are illegal or opposed to public policy, or have pernicious consequences to the nation's life as a whole. Section 23 of the Contract Act equates an agreement or contract opposed to public policy, with an agreement or contract forbidden by law. Similar ....
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....e undisclosed income for the block period as undisclosed income was in fact received by the asssessee in the course of carrying out its business activity as a builder. ITAT Pune in the case of Malpani Estate ITA 2296 to2298 held that assessee engaged in developing a housing project which was eligible for deduction u/s. 80IB on account of on money received from customer to whom flats were sold. The source of the additional income was the sale of flats in the housing project and therefore assessee was eligible for deduction u/s. 80IB(10). We have also noticed that the statement of the assessee was recorded on 08/10/2009 during the course of survey action carried out at the project of the assessee Laxmi Residency which the assessing officer stated to be eligible for deduction u/s 80IB(10) of the act. The relevant part of this statement is reproduced as under:- "English translation: Q.16 During survey today diary Floral No. 1 was found. On page 2 Nondh A-701, some amount is written. Further diary K.B. is also found. On page No.2 thereof in Nondh E-201 some amounts are written. Give your explanation about these Nondh. A.16 Explanation of Nondh in both the abov....