TMI Blog2014 (12) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... erived from the eligible housing project - the business of the assessee of developing and building residential project in the name and style of “Nilkanth Heights Project” was eligible housing project u/s 80IB, statutorily allowable deduction to the assessee cannot be denied – Decided in favour of assessee. - ITA No. 2610/Ahd/2014 - - - Dated:- 19-12-2014 - Shri N. S. Saini And Shri Kul Bharat,JJ. For the Petitioner : Shri S.B. Vaidya, AR For the Respondent : Shri M. K. Singh, Sr. DR ORDER Per Shri N. S. Saini, Accountant Member: This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-I, Surat dated 18.08.2014 for the Assessment Year 2010-11. 2. The sole issue involved in this appeal is that the CIT(A) erred in confirming the action of the Assessing Officer in disallowing deduction u/s 80IB on income of ₹ 1,25,00,000/- disclosed during the survey by treating this income as income from other sources. 3. The brief facts of the case are that the assessee is engaged in development and building of housing projects. A survey action u/s 133A of the Act was carried out at the business premises of assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction u/s. 80IB(10), by not paying any tax, on the income which is not voluntarily disclosed to the department by the assessee. The CIT(A) opined that the beneficial provisions of the Act are for those assessees who comply the provisions of Act voluntarily and disclose their income and other material facts to the department in true and correct manner. These provisions are not for those assessees who hide their income deliberately and consciously. In the case of assessee, it was obliged to disclose the receipts of ₹ 1,25,00,000/- in its books of account truly and correctly which, as admitted by the assessee, was not disclosed in its regular books of account with the intention of hiding it to the Department. This shows that the assessee acted deliberately in defiance of provisions of law and conducted dishonestly and acted in conscious disregard to its obligation. After conducting in this manner, it has claimed the benefit of deduction u/s. 80IB(10) and did not pay any tax. The assessee has got the benefit of deduction even after concealing the income and not disclosing it voluntarily. The assessee has disclosed the income only when the Department detected the concealment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible project. He, therefore, confirmed the action of the Assessing Officer disallowing deduction on the undisclosed receipts of ₹ 1,25,00,000/-. 5. The AR of the assessee submitted that the assessee was in the business of developing and building of housing project and since the undisclosed income was out of the project styled Nilkanth Heights Project which was the only project started during the year under consideration, the additional income disclosed by the assessee pertained to the said project and therefore, was allowable deduction to the assessee. During the course of survey, in the statement of the partners of the assessee-firm, the same fact was also stated. If the Assessing Officer accepts the additional income on the basis of such statement of partners of the assessee-firm during the survey, then he cannot rely on part of the statement and not rely upon other part of the statement. He relied on the following decisions:- (1) CIT vs. Mhaskar General Hospital (Guj), in Tax Appeal No.1474 of 2009, order dated 09.08.2011, wherein while deciding question No.(B), the Hon ble Gujarat High Court held as under:- With respect to second question, we may notice that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous and prejudicial to the interests of the revenue. Rampyari Devi Saraogi v. Commissioner of Income-tax, (1968) 67 ITR 84 (SC) and in Smt. Tara Devi Aggarwal v. Commissioner of Income-tax, West Bengal, 88 ITR 323. In the case of S.K.Srigiri and Bros. (supra), the Karnataka High Court held as under: We have perused the orders of the Tribunal. The Tribunal has carefully considered the questions put by the authority and the answer of the partners of the assessee's firm and based on the same, the Tribunal has come to the conclusion that the additional income received by the assessee in the instant case is from business and not from other sources. If the Tribunal has come to the conclusion that the additional income is from business, the remuneration paid to the partners has to be deducted while considering the profit and loss. In the circumstances, we are of the opinion that on facts the Revenue has no case on the merits. So far as the question of law is concerned, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I or section 80-IA of the Act. (3) Order of Ahmedabad Bench of the Tribunal in the case of ACIT v. M/s. Virat Gems, order dated 19.11.2010 passed in ITA Nos.3541 3756/Ahd/2008 for AY 2005-06, wherein the Tribunal has held as under:- We find that the assessee-firm was engaged in the business of diamonds and accordingly it had no other source of income and as per the disclosure made during the course of survey it had disclosed amount of ₹ 70 lacs as income disclosed u/s 133A of the Act under the head income from operations in its profit and loss account, whatever was found at the time of survey is in the nature of business income which was not disclosed by the assessee before the survey. The assessee claimed that the additional income was disclosed the additional income was disclosed which has direct nexus with the business of the assessee and further contended that the words book profit defined in Section 40(b) of the Act means net profit as shown in profit and loss account computed in the manner laid down in Chapter IV-D. The assessee-firm included the income disclosed u/s 133A in its profit and loss account under the year consideration and book profit compute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observation has been made that manufacturing and sale of Board paper and craft paper happened to be the only source of income of the assessee, therefore the amount disclosed consequence upon the search partakes the character of business income and eligible for the deduction u/s.80IB/80IA of the I.T. Act. In the present case, the assessee has admitted that the impugned amount was part of the sale consideration received in cash at the time of booking of flats and, therefore, the amount had direct and proximate connection with the normal business of construction activity, hence eligible for the deduction u/s.80IB(10) of the I.T. Act. Because of the factual as also legal aspect of the case, we hereby confirm the finding of Learned CIT(Appeals) and dismiss this ground of the Revenue. (5) Order of Rajkot Bench of the Tribunal in the case of ACIT v. Prabhudas S. Parekh, order dated 15.12.1999, passed in ITA No.1408/Ahd/1993 in AY 1991-92, wherein the Tribunal has held as under:- 4. We have heard both the parties. The respondent is an individual engaged in the business of manufacture, sale and export of gold/silver articles. Search and seizure operation under sec.132 of the I.T. Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to find out the head of income. The head of income has to be determined from the nature of the business the assessee was carrying on at the time of search. In this particular case, the assessee was not carrying on any other activity for earning the income. Therefore, the income disclosed by the assessee under sec.132(4) has to be assessed under business income from the common notion of a practical man. The head income from other sources is a residual head and the income has to be assessed under that head only if the same is not covered under any other head. In the present case, as is admitted by the assessee under sec.132(4) and accepted by the department, the income has to be assessed as income from business and the question of assessing this income under other sources does not arise. 7. Under the circumstances and in view of the legal position, discussed above, the department's case fails and we /q are of the considered opinion that the income has been correctly treated by the learned Commissioner (Appeals) as income from business and his findings do not require any interference from our side. He further submitted that this order of the Tribunal dated 15.12.1999 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer. He observed that the assessee, during the survey, admitted unrecorded receipts in the regular books of accounts. Had the Department not conducted survey u/s 133A at the business premises of the assessee-firm and detected the undisclosed income, the assessee would not have disclosed these receipts to the Department. The assessee has included these undisclosed receipts in the total turnover and consequently in its net profit and claimed deduction u/s 80IB(10) of the Act. Thus, no tax has been paid by the assessee on the income which he was forced to disclose due to the action/detection by the Department during the survey proceedings. According to the CIT(A), the intention of the legislature is to give incentive to honest assessees to comply with the provisions of the Act and disclose the true and correct income voluntarily and not to defaulters/evaders of income-tax. Therefore, the assessee has wrongly claimed the benefit of deduction u/s 80IB(10) of the Act. He, therefore, held that the Assessing Officer has correctly assessed the additional income of ₹ 1,25,00,000/- disclosed by the assessee during the course of survey as income from other sources. 11. Before u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount had direct and proximate connection with the normal business of construction activity, hence eligible for the deduction u/s.80IB(10) of the I.T. Act. Because of the factual as also legal aspect of the case, we hereby confirm the finding of Learned CIT(Appeals) and dismiss this ground of the Revenue. 13. In the instant case, we find that it is not in dispute that the only business of the assessee was of developing and building of housing project styled Nilkanth Heights Project . No material has been brought before us to show that the assessee was engaged in any other activity. Further, during the course of survey, the assessee has categorically stated that the amounts mentioned in loose documents marked as BF- 44 represents additional income of the said business. Only on the basis of this declaration of the assessee, the income of the assessee of ₹ 1,25,00,000/- was accepted by the survey officials in the hands of the assessee and was assessed in the hands of the assessee. Further, we find that as per provisions of Section 80IB, deduction is allowable in respect of income derived from the eligible housing project. In the instant case, it is not in dispute that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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