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2013 (5) TMI 441 - ITAT MUMBAIDeduction u/s 80IB(4)- whether an allowable expenditure added under Section 40(a)(ia) - reopening of assessment - Held that:- The AO has observed in his order that as per items in the report of auditor in form 3CD under Section 44AB, the business income is computed which has been claimed as deduction under Section 80IB and accordingly, the deduction was allowed. From this observation of the AO, who passed assessment originally, it is clear that the assessee claimed deduction u/s 80IB as per profit and loss account and disallowed by the assessee himself in terms of Section 40(a)(ia) the required. In this way, the total business income was computed at Rs.40,84,160/- and deduction on that amount was claimed, which the AO has allowed after satisfying that on business income deduction u/s 80IB is allowable in full. Thus this is a clear cut case of change of opinion as one AO has allowed deduction by considering the fact that disallowance of expenditure under Section 40(a)(ia) has been made by assessee himself and, therefore, business income was increased and on business income, the deduction is allowable. Therefore, the reopening of the assessment was bad in law. See M/s 1Up Clothing Co (2013 (5) TMI 88 - GUJARAT HIGH COURT) wherein held that deduction on the amount of expenditure disallowed in terms of Section 40(a)(ia) is allowable as the disallowance on expenditure is part of business activity and, therefore, the business profit increased and on increased business profit deduction is allowable. In favour of assessee.
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