TMI Blog2017 (10) TMI 922X X X X Extracts X X X X X X X X Extracts X X X X ..... have been received as "on money" in respect of booking of above flats of Laxmi Residency and this amount was unrecorded income of Laxmi Residency for F.Y.2009-10. The affirmation of the assessee was not rebutted during the time of recording his statement and during the course of assessment proceedings by the assessing officer with any cogent material to prove that amount declared was earned from any other activities. In view of the above mentioned facts and findings, we considered that the income disclosed was income of the assessee from the business and not from other sources. - Decided in favour of assessee. - ITA No. 2300/Ahd/2014 - - - Dated:- 11-4-2017 - Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member For The Revenue : Mr. Ashish Pophare , Sr. D.R. For The Assessee : Mr. R. N. Vepari , A.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This assessee s appeal for A.Y. 2010-11, arises from order of the CIT(A)-V, Surat dated 24-07-2014 in appeal no. CAS/V/11/2013- 14, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act . 2. The assessee has raised following grounds of appeal:- (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;, in utter ignorance of the statement recorded in survey and not allowing deduction u/s 80-IB (10) of the Act on the business income of ₹ 1.00 crore disclosed in survey. On the perusal of the facts it is observed that during the course of survey u/s 133A of the Act the partner of the firm Shri Vasantbhai H. Gajera in the statement on oath had admitted of earning unaccounted income of ₹ 1,01,00,000/- from M/s Laxmi Residency project. The appellant did not furnish any details before the AO regarding his claim of 80IB(10) deduction which included the 'on-money' admitted as undisclosed income during the survey operation. The appellant during the appellate proceedings submitted that the appellant has only one source of income i.e. the project of M/s Laxmi Residency and therefore the income generated from the real estate business included the 'on money ' earned and therefore this income was eligible for deduction j/s 80IB(10). 6.1.1 He relied on several case laws by the appellant have been perused and it is found that the facts and circumstances of the instant case is different and therefore case laws are not applicable in the instant case. During t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be taxable, but no deduction for such unlawful means employed for said purpose can be given. It is true that under the Act, the income is, of course, taxed, but the illegal ways and means employed by the assessee for procuring such illegal profit cannot be countenanced and it is against the public policy. Similar view has been expressed in the case of Sauser Liquor Traders, 222 ITR 33 (MP). 6.2.2 Expenses which are permitted as deductions are such as are made for the purpose of carrying on the business, i.e., to enable a person to carry on and earn profit in that business. It is not enough that the disbursements are made in the course of or arise out of or are concerned with or made out of the profits of the business but they must also be for the purpose of earning the profits of the business. If a sum is paid by an assessee conducting his business, because in conducting it he has acted in a manner which has rendered him liable to penalty, it cannot be claimed as a deductible expense. It must be a commercial loss and in its nature must be contemplable as such. Such penalties which are incurred by an assessee in proceedings launched against him for an infraction of the law can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty or fine or the value of the goods confiscated by the statutory authority as expenditure wholly and exclusively incurred for the purposes of carrying on the trade. It has been consistently held by the English Courts that fines or penalties payable for violation of law cannot be permitted as deduction under the Act. That will be against public policy. Even though the need for making such payments has arisen out of trading operations, the payments are not wholly and exclusively for the purpose of the trade. One can carry on his trade without violating the law. 6.2.4 Spur of loss could not be a justification for contravention of law. The appellant was expected to carry on the business in accordance with law. If the assessee contravened the provisions of FERA to cut down its losses or to make larger profits while carrying on the business, it was only to be expected that proceedings would be taken against the assessee for violation of the Act. The expenditure incurred for evading the provisions of the Act and also the penalty levied for such evasion could not be allowed as deduction. Moreover, it will be against public policy to allow the benefit of deduction under one statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for charging of interest in order and is upheld. Hence, the ground of appeal is dismissed. 4. During the course of appellate proceedings before us, the ld. counsel contended that the ld. CIT(A) has erred in not allowing the claim of deduction u/s. 80IB(10) on ₹ 1.1 crores disclosed during survey carried on the above referred project which was eligible for deduction u/s sec.80IB(10) of the act. He has also submitted paper book containing, correspondence made with the Ld.CIT(A)-V, copy of acknowledgement of return of income and copy of computation of income for assessment year 2010-11, copy of the statement recorded in survey on 09-10-2009, copy of audited accounts for the period of 31-03-2010, particulars of judicial pronouncements etc. On the other hand, ld. departmental representative relied on the order of the ld. CIT(A). 5. We have heard both the sides and perused the material on record. We find that the statement of the assessee was recorded on 08/10/2009 during the course of survey action carried out at the project of the assessee Laxmi Residency. We have also noticed from the contents of the assessment order that during the year the assessee firm has construc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of booking of above flats of Laxmi Residency. This amount has been received by us by cash. Q.18 According to what you have mentioned, you have received on money in your project. Then how much amount has been received as on money in this project? A.18 Till this date, we have received about ₹ 1,00,00,000 from this project. Q.19 In reply to the above question, you have stated that you have received for this project on money of about ₹ 1,00,00,000. Then what have you to say about it? A.19 This amount is unrecorded income of Laxmi Residency for F.Y.2009-10 which by this statement I declare as unaccounted income ₹ 1,01,00,000 (Rupees One crore one lac only) We will pay whatever tax is legally payable on this amount, we will pay. The extracts of the statement indicate that the declared amount was earned from the project Laxmi Residency which was covered for survey action. In the statement as supra the assessee had stated that these amounts have been received as on money in respect of booking of above flats of Laxmi Residency and this amount was unrecorded income of Laxmi Residency for F.Y.2009-10. The affirmation of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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