INCOME TAX ACT, 1961

Section 80-IA(4)

Deduction under section 80-IA(4) - Allowability - Miscellaneous receipts - Receipts, whether business nature

On the denial of deduction under section 80-IA(4) in respect of the miscellaneous receipts, the AO noticed that the assessee earned miscellaneous receipts and credited to the Profit and Loss Account. These receipts were considered as a business receipts. On finding, these receipts were not prima facie business receipts arising out of the business activity of the assessee, the AO considered them as non-business income and also proposed to deny the claim under section 80-IA(4) of the Act on these Miscellaneous Receipts. A table was furnished wherein 20 types of miscellaneous recipes are reflected. The AO discussed each of these miscellaneous receipts and held that, for the assessment year 2009-10, Rs. 16,86,241 was only found eligible for such a claim. Balance of the income of Rs. 3,85,74,806 is taxed as 'Income from other sources' as per discussion given in assessment order. Similar adjustments was done in all the assessment years under consideration. CIT(A) opined to term the 'contractor' is not essentially contradictory to the term 'developer'. The assessee was held to be eligible or deduction under section 80-IA(4). The CIT(A) found the assessee, being a contractor, constitutes a developer for the purpose of section 80-IA(4) and the deduction is found eligible in respect of both the regular business income of the assessee as well as the undisclosed business income offered by the assessee during the search and seizure action. CIT(A) granted relief to the assessee in all the three assessment years.Held: The miscellaneous receipts can be sub-grouped into three lots, i.e., (i) the receipts covered by the earlier Tribunal's order; (ii) the receipts, assessee never claimed deduction; and, (iii) the business connected receipts or otherwise. So far as sub-group one is concerned, receipts is covered by the order of the Tribunal in the assessee's own case for the assessment year 2008-09. The AO was directed to follow the said order of the Tribunal scrupulously. When it comes to the balance of receipts, in respect of few receipts, the assessee never claimed the deduction. The AO was directed to consider the same. Finally, regarding the rest of the receipts, if any, AO shall examine each of them carefully qua the business nature, nexus to the business activity of the assessee, etc., and allow the deduction if they were of business nature. The AO, after giving reasonable opportunity to the assessee, shall decide the issue in accordance with the law.

Followed:Vide ITA No. 254/PUN/2008, ITA No. 431/PUN/2007, ITA No. 435/PUN/2007 and ITA No. 766/PUN/2009.

REFERRED : ABG Heavy Industries Ltd. & Ors. (2010) 322 ITR 323 (Bom-HC) : 2010 TaxPub(DT) 1513 (Bom-HC), Evesmile Construction Co. (P) Ltd. ITA No. 4238/Mum/2010, dated 30-8-2011 : 2012 TaxPub(DT) 15 (Mum-Trib), CIT v. Sheth Developers (P) Ltd. (2013) 254 CTR 127 (Bom) : 2013 TaxPub(DT0 163 (Bom-HC), ITO v. Gajraj Construction vide ITA No. 2057/PUN/2013 for the assessment eyar 2010-11, dated 11-2-2015 : 2015 TaxPub(DT) 3021 (Pune-Trib) and ANBU Textiles v. Asstt. CIT, (2003) 262 ITR 684 (Mad) : 2003 TaxPub(DT) 853 (Mad-HC). Control Touch Electronic (P) Ltd. (2001) 77 ITD 522 (Pune-Trib) : 2001 TaxPub(DT) 353 (Pune-Trib), CIT v. Suman Papers & Boards Ltd. (2009) 314 ITR 119 (Guj) : 2009 TaxPub(DT) 1407 (Guj-HC) and J.K. Export SB of Settlement Commission, SA No. 21, dated 29-1-1996, CIT v. V. Subramaniyan (Late) 305 ITR 289.

FAVOUR : Matter remanded/In assessee's favour (Partly).

A.Y. : 2009-10 to 2011-12

INCOME TAX ACT, 1961

Section 80-IA(4)

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