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2020 (9) TMI 1138 - HC - Income TaxDeduction u/s 80IB(10) - unaccounted money, found during the search proceedings and explained as on money received - Whether the Tribunal was right in holding that, transactions entered into, with the buyers of flats, are eligible for deduction, even though there is violation of the sub-Sections(e) and (f) of Section 80IB(10), on the ground that these transactions were entered into before the amendments to sub-Section (3) and (f) of Section 80IB(10)? - HELD THAT - In case, a residential unit is allotted prior to 01.04.2010, the conveyance in such a residential unit can be registered subsequently also and in such a case also the assessee will be entitled to the benefit of deduction under Section 80IB(10) of the Act. Clauses (e) and (f) of Section 80IB(10) of the Act are prospective in nature and apply in respect of transactions entered on or after 01.04.2010, which is evident from Circular No.5/2010 dated 03.06.2010. From perusal of the order passed by the Assessing Officer, it is evident that unaccounted money during the search proceedings has been treated to be business income by the Assessing Officer. Tribunal itself has found that all the transactions except in respect of two flats have been entered into by the assessee in the year 2007-08 and therefore, the provisions cannot be applied to transactions entered into by the assessee prior to introduction of clauses (e) and (f) to Section 80IB(10) - Decided against revenue.
Issues:
1. Eligibility of unaccounted money for deduction under Section 80IB(10) of the Income Tax Act. 2. Allowance of transactions entered into before the amendments to Section 80IB(10). 3. Interpretation of clauses (e) and (f) of Section 80IB(10) in relation to the timing of transactions. 4. Treatment of income found during search proceedings as business income. Analysis: Issue 1: The appeal raised the question of whether unaccounted money found during search proceedings can be considered for deduction under Section 80IB(10) of the Income Tax Act. The Assessing Officer treated the unaccounted money as business income. The Tribunal found that the unaccounted money was indeed business income, and therefore, the assessee was eligible for deduction under Section 80IB(10). Issue 2: Another substantial question was whether transactions entered into before the introduction of clauses (e) and (f) to Section 80IB(10) could be considered for deduction. The Tribunal noted that most transactions were entered into by the assessee prior to the introduction of these clauses. As a result, the provisions of clauses (e) and (f) could not be applied to transactions made before their introduction. Issue 3: The interpretation of clauses (e) and (f) of Section 80IB(10) in relation to the timing of transactions was crucial. The clauses were found to be prospective in nature and applied to transactions entered into on or after 01.04.2010. The Tribunal's decision was based on the fact that the transactions in question were made before the introduction of these clauses, thereby making the assessee eligible for deduction under Section 80IB(10). Issue 4: Lastly, the treatment of income found during search proceedings as business income was a key aspect of the case. The Tribunal affirmed that the Assessing Officer had correctly treated the income found during the search as business income. This decision further supported the assessee's eligibility for deduction under Section 80IB(10). In conclusion, the High Court dismissed the appeal, ruling in favor of the assessee on all substantial questions of law. The decision was based on the timing of transactions, the treatment of unaccounted money as business income, and the prospective nature of clauses (e) and (f) of Section 80IB(10) in relation to the eligibility for deduction.
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