2011 (1) TMI 1578 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of addition made by Assessing Officer on account of survey disclosure.

Summary:
The Revenue's appeal was against the deletion of an addition made by the Assessing Officer on account of survey disclosure. The Assessing Officer treated the business income representing disclosure of undisclosed stock-in-trade, cash-in-hand, and investment in renovation of shop found during the survey as income from other sources u/s 69B of the Income-tax Act, 1961. The assessee claimed this declaration and disclosure as income from trading receipts in the audited accounts. The Assessing Officer reworked the allowable interest and remuneration to the partners u/s 40(b)(v) of the Act by excluding the additional income offered during the survey. The CIT(A) allowed the claim of the assessee, stating that the excess stock, excess cash found, and renovation expenses represented business income of the current year and were part of the book profit included under the business head. The CIT(A) found no material to dispute the appellant's contention that the source of the firm's income was from business activities. The Tribunal dismissed the Revenue's appeal, stating that the income declared during the survey was considered as business income, and consequential deduction u/s 40(b) was available.

The Assessing Officer's addition was based on the disclosure made during a survey, treating it as income from other sources. The CIT(A) allowed the claim of the assessee, stating that the disclosed amounts represented business income and were part of the book profit included under the business head. The Tribunal upheld the CIT(A)'s decision, emphasizing that the income declared during the survey was considered as business income, entitling the assessee to claim deductions u/s 40(b) of the Act.