TMI Blog2013 (2) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... taxed separately – In favour of assessee - ITA No.386/PN/2011 - - - Dated:- 30-10-2012 - Shailendra Kumar Yadav and R.K. Panda, JJ. Appellant Rep by: Shri Sunil Ganoo Respondent Rep by: Smt Vinita Menon ORDER Per: Shailendra Kumar Yadav: This appeal has been filed by the Revenue against the order of the CIT(A) on following grounds: 1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was justified in holding the total income determined by the Assessing Officer after disallowance of expenditure as per sec.40(a)(ia) of the I.T. Act as "profit derived from development and construction of housing project" eligible for deduction u/s.80IB(10) of the I.T. Act, when the total income under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me at Rs.35,58,894/-. Aggrieved by the said order, assessee preferred appeal before the First Appellate Authority, wherein the CIT(A) on perusal of the assessment order, statement of facts and detailed written submissions made on behalf of the assessee as well as explanation provided on behalf of the assessee, observed that issue involved for the year under consideration in this appeal are same as in respect of A.Y. 2006-07 and following the same, appeal was allowed. On enquiry from Bench it was pointed out that in A.Y. 2006-07 the CIT(A) has decided the similar issue by observing as under: "7. I have given careful consideration to the contents of the assessment order and to the submissions of the learned AR of the Appellant and have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not disputing the addition made under section 40(a)(ia). Their contention is only that having made the addition, the AO should have allowed deduction under section 80IB(10) in respect of such amount which has been disallowed under section 40(a)(ia) also. To examine the merit of this claim it is necessary, in my view, to examine the language of the provision under which the addition was made, namely, section 40(a)(ia). The language of the said provision as it stood at the relevant time is reproduced below: "Amounts not deductible. 40. Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... "work" shall have the same meaning as in Explanation III to section 194C; (v) "rent" shall have the same meaning as in clause (i) to the Explanation to section 194-I; (vi) "royalty" shall have the same meaning as in Explanation 2 to clause (vi) of sub-section (1) of section 9; 10. Upon a plain reading of the provision, it is clear that upon violation of the conditions specified under clause (ia) the implication under section 40(a) would be that the said amount will not be deducted in computing income chargeable under the head "Profits and Gains of Business or Profession". In other words, the same will form a part of "Profits and Gains of Business or Profession" of the Appellant, which will be included along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have an income there must be a source. As such, any addition made to the business income went to increase the business profit but such business profit being fully exempt under the provisions of section 80IB(10), the additional amount too was eligible to claim deduction and could not be taxed separately in the Appellant s hands as an income without any source. 11. Accordingly, this ground of appeal is allowed and the addition made is hereby deleted." 3. Further, it was pointed out that Revenue has not preferred appeal for the reason that tax effect was less. In this background, the Ld. Authorised Representative submitted that appeal of Revenue be dismissed. On the other hand, Ld. Departmental Representative relied on the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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