2015 (8) TMI 1484 - AT - Income Tax

Amount disclosed by the assessee during the course of survey as eligible for grant of deduction under section 80IB(10) - HELD THAT - As decided in M/S. SHREE PADMAVATI DEVELOPERS 2012 (9) TMI 977 - ITAT AHMEDABAD that manufacturing and sale of Board paper and craft paper happened to be the only source of income of the assessee therefore the amount disclosed consequence upon the search partakes the character of business income and eligible for the deduction u/s.80IB/80IA of the I.T.Act. In the present case the assessee has admitted that the impugned amount was part of the sale consideration received in cash at the time of booking of flats and therefore the amount had direct and proximate connection with the normal business of construction activity hence eligible for the deduction u/s.80IB(10) Also as decided in M/S. SHETH DEVELOPERS (P) LTD. 2012 (8) TMI 159 - BOMBAY HIGH COURT no question of application of section 68 69 and 69A 69B and 69C of the said Act arises as the same has not been invoked by the Department. It is an admitted position between the parties as reflected even in the order the Assessing officer that undisclosed income was in fact received by the respondent in the course of carrying out its business activities as a builder. The same was returned by the respondent as income arising from profits and gains of business or profession and the same was accepted by the department unlike in the matter of Fakir Mohmad Haji Hasan 2000 (8) TMI 44 - GUJARAT HIGH COURT We are of the opinion that the issue in dispute is squarely covered in favour of the assessee by the above decision. The ld.First Appellate Authority has rightly considered the amount disclosed by the assessee during the course of survey as eligible for grant of deduction under section 80IB(10) of the Income Tax Act. Accordingly this ground of appeal of the Revenue is dismissed.

Summary

Issues Involved:
Appeal against order of CIT(A) deleting addition under sections 68, 69, and 69C of IT Act regarding undisclosed income credited in books of account.

Detailed Analysis:

Issue 1: Addition of undisclosed income
The Revenue appealed against the CIT(A)'s deletion of the addition of undisclosed income of Rs. 1,00,00,000 under sections 68, 69, and 69C of the IT Act. The Revenue argued that the assessee failed to explain the source of this amount, even though partners admitted it during a survey. The assessee contended that such undisclosed income should be considered business profit eligible for deduction under section 80IB. The Tribunal referred to a similar case where undisclosed income was considered part of business income and eligible for deduction. The Tribunal upheld the CIT(A)'s decision, stating that the undisclosed amount had a direct connection with the normal business activity, making it eligible for deduction under section 80IB.

Issue 2: Eligibility for deduction under section 80IB
The Revenue contended that since the source of the undisclosed income was not disclosed, the assessee was not entitled to deduction under section 80IB. However, the Tribunal, based on previous judgments, held that the undisclosed income, when related to business activities, qualifies for deductions under section 80IB. The Hon'ble Bombay High Court also supported this view, stating that the undisclosed income, when explained in the context of business operations, is eligible for deductions under section 80IB.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to allow the deduction under section 80IB for the undisclosed income. The judgments cited established that undisclosed income related to business activities can be considered for deductions under section 80IB. Therefore, the Tribunal concluded that the undisclosed amount in question was eligible for deduction under the Income Tax Act, and hence, the appeal of the Revenue was dismissed.