Amount not allowed for non deduction of TDS is eligible for deduction U/s. 80IB

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ITAT PUNE BENCH ‘B’

Income-tax Officer, Ward-9(3), Pune

v.

Kalbhor Gawade Builders

IT Appeal No. 386 (PN.) of 2011
[ASSESSMENT YEAR 2007-08]

Date of Pronouncement- 30.10.2012

 

We are not inclined to interfere with the finding of the CIT(A) because on account of violation of conditions prescribed under clause (ia) the implication u/s.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’. The same will form part of profits and gains of business or profession of the assessee which could be included along with income under all the other heads in the assessee’s gross total income. Once the said amount in question was disallowed u/s. 40(a)(ia), the same constituted a part and parcel of the assessee’s profits and gains from the business, which in turn would comprise a part of its gross total income and would be eligible for deduction in accordance with and to the extent specified by section 80IB. In case there is no other income from which amount could be disallowed in computing profit and gains of business was derived. Accordingly assessee was eligible to claim deduction u/s.80IB in respect of this amount. In this background the CIT(A) held that income representing the amounts of addition made on account of disallowance u/s. 40(a)(ia) is not derived from eligible business then what other activity was the said income derived from. In order 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 held by the CIT(A). This reasoned factual finding need no interference from our side.