Chapter VI-A deduction on enhanced profits

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..... of the Income-tax Act, 1961 ( the Act ), provides for deductions in respect of certain incomes. In computing the profits and gains of a business activity, the Assessing Officer may make certain disallowances, such as disallowances pertaining to sections 32 , 40(a)(ia) , 40A(3) , 43B etc., of the Act . At times disallowance out of specific expenditure claimed may also be made. The effect of .....

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..... s profits from business of developing housing project. The ultimate profits of assessee after adjusting disallowance under section 40(a)(ia) of the Act would qualify for deduction under section 80-IB of the Act . This view was taken by the courts in the following cases: Income-tax Officer - Ward 5(1) vs. Keval Construction, Tax Appeal No. 443 of 2012, December 10, 2012, Gujarat High .....

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..... ove, the Board has accepted the settled position that the disallowances made under sections 32 , 40(a)(ia) , 40A(3) , 43B , etc. of the Act and other specific disallowances, related to the business activity against which the Chapter VI-A deduction has been claimed, result in enhancement of the profits of the eligible business, and that deduction under Chapter VI-A is admissible on the pr .....

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