2011 (3) TMI 1647 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the question of whether the CIT(A) was justified in deleting disallowances made by the AO on account of deduction u/s. 80IB(3) claimed by the assessee on additional income declared during a survey action u/s. 133A. It also addresses whether the income declared during the survey action qualifies for deduction u/s. 80IB.

Issue 1 - Deduction u/s. 80IB(3):
The Revenue challenged the first appellate order regarding the deletion of disallowances made by the AO on account of deduction u/s. 80IB(3) claimed by the assessee on additional income declared during a survey action u/s. 133A. The CIT(A) allowed the claimed deduction based on a decision of the Pune Bench of the Tribunal in a similar case. The Tribunal upheld the CIT(A)'s decision, stating that the additional income declared during the survey proceedings was business income and eligible for deduction u/s. 80IB.

Issue 2 - Income Derived from Industrial Activity:
The AO declined the deduction claimed by the assessee on the additional income declared during the survey, arguing that it should be treated as income from undisclosed sources. However, the CIT(A) allowed the deduction, considering the additional income as eligible for deduction u/s. 80IB. The Tribunal agreed with the CIT(A), emphasizing that the additional income was related to the assessee's manufacturing business and should be included in eligible profits for deduction u/s. 80IB.

Separate Judgment:
No separate judgment was delivered by the judges in this case.

The judgment highlights the importance of correctly categorizing additional income declared during survey proceedings and its eligibility for deductions u/s. 80IB. The Tribunal's decision provides clarity on the treatment of such income as business income and its inclusion in eligible profits for deduction purposes.