Case Note & Summary
The appeal by the revenue under Section 260A of the Income Tax Act, 1961 challenged the order of the Income Tax Appellate Tribunal dated 12/10/2009 relating to the block period 1/4/1995 to 21/2/2002. The respondent-assessee, a builder carrying on business in Mumbai and Thane, was subjected to a search operation under Section 132 of the Act on 21/2/2002. During the search, the respondent's director declared undisclosed income of the group at Rs.7.00 crores for the block period, but in the return filed for the block period, the respondent showed its undisclosed income at Rs.3.50 crores. The Assessing Officer assessed the respondent for the block period and computed undisclosed income under Section 69A. The respondent claimed deduction under Section 80IB(10) before the Tribunal, which was allowed. The revenue appealed, raising two questions: (1) whether deduction under Section 80IB(10) can be allowed on income computed as undisclosed income under Section 69A, and (2) whether such deduction can be claimed for the first time before appellate authorities. The High Court noted that question (2) was covered by its earlier decision in Commissioner of Income Tax v. Pruthvi Brokers and Shareholders Private Limited, which held that a fresh claim could be urged before appellate authorities even if not made in the return. Regarding question (1), the court found that the Tribunal's decision allowing the deduction was correct and did not give rise to any substantial question of law. The court dismissed the appeal, upholding the Tribunal's order.
Headnote
A) Income Tax - Deduction under Section 80IB(10) on Undisclosed Income - Section 80IB(10) and Section 69A of the Income Tax Act, 1961 - The issue was whether deduction under Section 80IB(10) can be allowed on income computed as undisclosed income under Section 69A. The Tribunal held that the deduction is allowable, and the High Court upheld this view, finding no substantial question of law. (Paras 1-10) B) Income Tax - Fresh Claim Before Appellate Authorities - Section 80IB(10) of the Income Tax Act, 1961 - The question was whether a claim for deduction under Section 80IB(10) can be made for the first time before appellate authorities when not made in the return. The High Court, following its earlier decision in Commissioner of Income Tax v. Pruthvi Brokers and Shareholders Private Limited, held that such a claim can be urged before appellate authorities. (Paras 5-6)
Issue of Consideration
Whether deduction under Section 80IB(10) of the Income Tax Act, 1961 can be allowed on income computed as undisclosed income under Section 69A of the Act, and whether such deduction can be claimed for the first time before appellate authorities
Final Decision
Appeal dismissed. The Tribunal's order allowing deduction under Section 80IB(10) on undisclosed income computed under Section 69A is upheld. Question (2) is covered by earlier decision in Pruthvi Brokers case.
Law Points
- Deduction under Section 80IB(10) is allowable on undisclosed income computed under Section 69A
- even if not claimed in the return
- as it can be raised before appellate authorities
