2011 (3) TMI 1716 - HC - Income Tax

Summary

Issues involved:
The issue involves the eligibility of the assessee for deduction u/s. 80IB of the Income-tax Act, 1961 on disallowance made u/s. 40 (a)(ia).

Judgment Summary:

Eligibility for Deduction u/s. 80IB:
The assessee filed a return of income declaring 'NIL' income and claimed a deduction of &8377; 12,82,568/= u/s. 80IB. The Assessing Officer determined the total income at &8377; 17,13,927/=, making an addition u/s. 40 (a)(ia). The CIT [A] confirmed the disallowances but directed the Assessing Officer to grant deduction u/s. 80IB on the enhanced profits. The assessee accepted the CIT [A]'s order, which was challenged by the Revenue before the Tribunal. The Tribunal rejected the Revenue's appeal, leading to the present appeal before the High Court.

Decision and Reasoning:
The High Court found no infirmity with the view taken by the CIT [A] and the Tribunal that the assessee would be entitled to proportionate benefit under Section 80IB on the enhanced profit. The Tribunal's decision was supported by previous orders regarding benefits u/s. 80HHC under similar circumstances. The High Court noted a similar question in a previous case where the Tribunal's view was upheld. Considering the fact-situation, the High Court upheld the Tribunal's order and dismissed the Tax Appeal.

Therefore, the High Court upheld the Tribunal's decision regarding the eligibility of the assessee for deduction u/s. 80IB on the enhanced profit, dismissing the Tax Appeal.