(2012) 150 TTJ 590 (Pune) Dy.CIT vs. Magarpatta Township Development & Construction Co. ITA No.822 (Pune) of 2011 A.Y.2007-08. Dated 18-09-2012

Facts

For the relevant assessment year, the Assessing Officer did not allow assessee’s claim u/s. 80-IB(10) on the enhanced income resulting from statutory disallowances u/s. 43B, 40(a)(ia) and 36(1)(va). The CIT(A) allowed the claim of the assessee.

Held

The Tribunal, relying on the decision in the case of S.B.Builders & Developers V. ITO (2011) 136 TTJ 420 (Mum.)/(2011) 50 DTR (Mumbai) (Trib) 299, allowed the assessee’s claim. The Tribunal noted as under:

It is held by the jurisdictional High Court in the case of CIT vs. Gem Plus Jewellery India Ltd. (2010) 233 CTR (Bom) 248/(2010) 42 DTR (Bom) 73 that the claim of deduction u/s. 10A was to be allowed on enhanced profit resulting from disallowance u/s. 43B/36(1) (va).

It is held by the Ahmedabad bench in the case of ITO vs. Computer Force [(2011) 136 TTJ 221 (Ahd.)/(2011) 49 DTR (Ahd.)(Trib) 298, ITA Nos.1636/Ahd./2009, 2441/Ahd./2007, 2442/Ahd./2007 and 1637/Ahd./2009 order dt.30.07.2010] that enhanced income due to disallowance u/s. 40(a)(ia) was eligible income under the head `Profits and gains of business or profession’, on which claim u/s. 80-IB was allowable.

In view of the ratio of these decisions, it is abundantly clear that in the appellant’s case also deduction u/s. 80-IB(10) was liable to be allowed in case there was enhanced income on account of statutory disallowances u/s. 43B, 40(a)(ia) and 36(1) (va) etc. as mentioned above. Since the nature of receipts on the credit side of P&L a/c. for the eligible housing project u/s. 80-IB(10) was the same and the disallowance was of the expenditure on the debit side for the same eligible housing project, it would result into enhancement of the net profit of the said eligible housing project. Therefore, the appellant’s claim is to be allowed.