2018 (11) TMI 1240

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....reinafter also called `the Act') on the enhancement of income due to certain additions/disallowances made in the assessment order. 3. Briefly stated, the facts of the case are that the assessee filed return declaring total income at Nil. It was so determined by taking `Business income' at Rs. 63,87,332/- and, thereafter, claiming deduction u/s 80IC of the Act for an equal amount. The Assessing Officer computed total income by making disallowance of Rs. 29,11,964/- u/s 40(a)(ia) of the Act on account of non-deduction of tax at source from the payments made by the assessee u/s 194J of the Act; and Rs. 20,97,044/- on account of 20% of purchase of paddy husk at Rs. 1.04 crore for want of full supporting evidence. The assessee itself offered ....

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.... VI-A DEDUCTION ON ENHANCED PROFITS- REG. Chapter VI-A of the Income-tax Act, 1961 ("the Act"), provides for deductions in respect of certain incomes. In computing the profits and gains of a business activity, the Assessing Officer may make certain disallowances, such as disallowances pertaining to sections 32, 40(a)(ia), 40A(3), 43B etc., of the Act. At times disallowance out of specific expenditure claimed may also be made. The effect of such disallowances is an increase in the profits. Doubts have been raised as to whether such higher profits would also result in claim for a higher profit-linked deduction under Chapter VI-A. 2. The issue of the claim of higher deduction on the enhanced profits has been....

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....3,2016, Allahabad High Court, NJRS-2016-LL-0503-77. The above views have attained finality as these judgments of the High Courts of Bombay, Gujarat and Allahabad have been accepted by the Department. 3. In view of the above, the Board has accepted the settled position that the disallowances made under sections 32, 40(a)(ia), 40A(3), 43B, etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, and that deduction under Chapter VI-A is admissible on the profits so enhanced by the disallowance. 4. Accordingly, henceforth, appeals may not be filed on this ground by officer....