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| The Tax Publishers2020 TaxPub(DT) 1646 (Mum-Trib) INCOME TAX ACT, 1961
Section 80-IA(4)
Where the assessee was engaged in business eligible for deduction under section 80-IA then any disallowance/addition will go to enhance its profits eligible for deduction under section 80-IA.
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Deduction under section 80-IA - Computation - Treatment of disallowance and deduction towards bogus purchases -
A search and seizure action was taken on assessee, in which the assessee was asked to substantiate purchases made. AO made addition towards bogus purchases. CIT(A) upheld the addition but allowed deduction under section 80-IA on enhanced profits. Held: AO made the addition on bogus purchases disregarding the documents submitted by the assessee in support of the purchases made. It is fact that the addition was confirmed by AO based on the statement of Shri Devang K. Gandhi and it was also a fact that assessee had already declared profit which was matching to industry average as well as assessee was carrying on eligible business and aware of the fact that its business is eligible to claim deduction under section 80-IA(4) of the Act, therefore, it was not necessary for the assessee to engage in taking accommodate entry to the value of Rs. 40 lakhs in order to reduce the eligible profit. Considering the volume of the business of the assessee, the disallowance made by the assessing officer has no impact on the profit nor it is necessary for the assessee to reduce any profit, which is eligible to be claimed under section 80-IA(4). CIT(A) rightly allowed the increase in eligible profit because of sustaining the disallowance made by the AO under section 80-IA(4).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2008-09 & 2013-14
INCOME TAX ACT, 1961
Section 80-IA
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