JCIT(OSD), Circle-1(1)(2), Ahmedabad V. M/s. Devraj Infrastructure Ltd., Ahmedabad

ITA 1607/AHD/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6764 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bogus purchase; TDS
• Section: 43B; 40A(3); 143(3); 40(a)(ia); 72; 13; 22

Judgement Text

, हमदाबाद “A” ा हमदाबाद IN THE INCOME TAX APPELLATE TRIBUNAL “ A” BENCH, AHMEDABAD ( Conducted Through Virtual Court ) BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER And SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER Sl. No(s) ITA No(s) Assess- ment Year(s) Appeal(s) by Appellant vs. Respondent Appellant(s) Respondent(s) 1. 1607/Ahd/2018 2010-11 Jt.CIT(OSD) Circle-1(1)(2) Ahmedabad M/s.Devraj Infrastructure Ltd. Plot No.10A, Survey No.11 Devraj Industrial Park Piplaj-Pirana Road Village Piplaj Dist.Ahmedabad PAN: AACCD3567E 2. 1359/Ahd/2017 2011-12 Dy.CIT Circle-1(1)(2) Ahmedabad -do- Assessee 3. 2441/Ahd/2017 2012-13 -do-Revenue -do-Assessee Assessee by : Shrui A.C. Shah, A.R. Revenue by : Shri Alok Kumar, CIT-DR Shri S.S. Shukla, Sr.DR स ु नवाई ा / D at e o f H ea ri n g : 09 / 03 / 2 0 22 घोषणा ा /D a t e o f P ro nou nce me n t : 16 / 03 / 20 22 देश/O R D E R PER BHAGIRATH MAL BIYANI, A.M.: These three appeals by the Revenue are directed against the order dated 08.05.2018 in Appeal No. CIT(A)/GNR/139/2013- 14, dated 24.03.2017 in Appeal No. CIT(A)-6/32/13-14 and dated 23.08.2017 in Appeal No. CIT(A)-1/DCIT Circle-1(1)(2)/26/2016- 17, passed by CIT(A), Gandhinagar [“Ld. CIT(A)” for short], respectively for Assessment-Year 2010-11, 2011-12 and 2012-13, arising out of the respective assessment-orders passed by ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 2 - Assessing Officers [“Ld. AO” for short] u/s 143(3) of the Income- tax Act, 1961 [“the Act” for short]. As several grounds raised in these appeals are common, we have heard all these appeals together and dispose of by this common order. ITA No. 1607/Ahd/2018 for Assessment-Year 2010-11 : 2. In this Appeal, the revenue has raised following Grounds: “1. That the ld. CIT(A) erred in law and on facts in deleting the disallowance of Rs. 16,77,93,761/- made u/s 80-IA of the Act. 2. The appellant craves to leave, to amend and / or to alter any ground or add a new ground which may be necessary.” 3. In Ground No. 1, the issue involved is the allowablity of deduction of Rs. 16,77,93,761/- u/s 80-IA(4)(iii) of the Act. 4. The assessee is a company engaged in the business of development of industrial parks. The assessee developed one such industrial park named “Devraj Industrial Park” at Village - Piplaj, district - Ahmedabad. In order to avail the benefit of deduction u/s 80-IA(4)(iii) and as required by that section, the assessee applied to the Secretary, ITA-1, Department of Revenue, CBDT vide application No. F.No.178/07/2009-ITA-1 dated 27.01.2009 for notification of “Devraj Industrial Park” under Industrial Park Scheme, 2008. Vide letter dated 09.02.2009, the CBDT called for a report from Ld. AO on “Devraj Industrial Park”, ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 3 - which the Ld. AO submitted. Much later thereafter on 14.02.2013, the CBDT issued a notice to the assessee raising certain issues for clarifications, which is reproduced by Ld. AO in Para No. 5.5 of the assessment-order. The assessee submitted replies on those issues vide letter dated 25.02.2013 and also filed a copy of the letter to the Ld. AO during the course of assessment-proceedings, which is also reproduced by Ld. AO in Para No. 5.6 of the assessment-order. Thereafter the matter remained pending with the CBDT. The assessee filed return for A.Y. 2010-11 on 15.10.2010 claiming deduction u/s 80-IA(4)(iii) which stood pending for assessment before the Ld. AO. The Ld. AO, therefore, issued a show-cause notice dated 18.03.2013 calling the assessee to explain as to why the deduction claimed u/s 80- IA(4)(iii) should not be disallowed in the absence of Notification from the CBDT. The assessee filed an extensive reply dated 25.03.2013 containing all details of “Devraj Industrial Park” to the Ld. AO and requested the Ld. AO to allow deduction u/s 80- IA(4)(iii) as claimed in the return since the assessee satisfied all conditions. In the letter, the assessee also mentioned “We assure your honour that if CBDT do not approve, we will make the payment of taxes consequent on disallowance of deduction u/s 80-IA(4)(iii).” This letter dated 25.03.2013 is also reproduced by Ld. AO in Para No. 5.8 of the assessment-order. However, the Ld. AO disallowed the deduction due to the sole reason that till ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 4 - finalization of assessment, the notification from the CBDT was not received. 5. Being aggrieved by the order of Ld. AO, the assessee filed appeal to Ld. CIT(A). Before Ld. CIT(A), the assessee submitted that since there was a delay on the part of CBDT in issuing Notification, the assessee had filed Special Civil Application (SCA) No. 6026 / 2014 followed by SCA No. 17118 / 2014 to the Hon’ble Gujrat High Court, whereupon the Hon’ble High Court directed the CBDT to issue notification. In compliance thereof, the CBDT issued Notification No. 121/2016/F.No.178/07/2009-ITA-1 dated 26.12.2016, a copy of which is also placed by Ld. AR at Page No. 1 of the Paper-Book. However, vide Condition No. 7 of the Notification, the CBDT allowed deduction for 10 consecutive assessment years out of 15 years beginning with the assessment- year relevant to the date of commencement of industrial park. Since the date of commencement of industrial park mentioned 05.09.2010, the notification allowed deduction from assessment- year 2011-12 onwards only, which meant that the assessee was not eligible for deduction for assessment-year 2010-11. Hence the assessee again filed SCA No. 7098 / 2017 to Hon’ble Gujrat High Court, whereupon the Hon’ble High Court allowed deduction from assessment-year 2010-11 by observing as under in its order dated 03.11.2017: “31. As a result of a specific finding given by us that the petitioner is deemed to have been eligible for availing tax deduction under ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 5 - section 80-IA(4)(iii) from the financial year 2009-10, Assessment Year 2010-11, the order rejecting the Rectification Application dated 17.03.2017 deserves to be set aside. The condition in the Notification extending the benefit of availing of deductions under section 80-IA(4)(iii) from the date of commencement of 05.09.2010 is a condition not found in any of the other notifications vis-à-vis other such projects, produced in other such cases. Accordingly, the respondents are directed to delete the condition No. 7 in the Notification of 26.12.2016. The petitioner’s claim for deduction at whichever stage pending before the assessing or appellate authority shall be governed by this declaration. Petition stands disposed of accordingly. Rule is made absolute accordingly.” [Underlined emphasis supplied] Taking into account above facts, the Ld. CIT(A) allowed deduction, as claimed by the assessee in the return, by observing as under on Page No. 25 of the appeal-order: “In view of above facts as narrated above and the ruling of the Hon’ble Gujrat High Court, setting aside the order of the CBDT rejecting the rectification application of the appellant, the matter is clearly decided in the appellant’s favour. The Hon’ble jurisdictional High Court has clearly held that the appellant is deemed to have been eligible for availing tax deduction under section 80-IA(4)(iii) from the financial year 2009-10, Assessment Year 2010-11, which is the year consideration. The appellant is, therefore, eligible to claim deduction u/s 80-IA(4)(iii) of the Act from the AY 2010-11 and therefore, the addition made by the AO amounting to Rs. 16,77,93,761/- by rejecting the appellant’s claim of deduction u/s 80-IA(4)(iii) is deleted. Ground of appeal No. 1 is allowed.” 6. The revenue has now challenged this action of Ld. CIT(A) in present appeal. 7. Before us the Ld. DR was fair enough to accept that the Hon’ble Gujrat High Court has deleted the Condition No. 7 of the Notification issued by the CBDT and therefore the assessee was ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 6 - eligible to claim deduction from assessment-year 2010-11. However, the Ld. DR contended that apart from Condition No. 7, the Notification imposes other conditions as well, which the Ld. AO was not able to verify because the Notification was issued after completion of assessment. The Ld. DR further submitted that even the Ld. CIT(A) has also not verified whether or not all conditions were satisfied by the assessee. Hence the Ld. DR prayed that the matter should be remanded back to the lower authorities. 8. Per contra, the Ld. AR submitted that the assessment-order clearly demonstrates that the Ld. AO has rejected deduction u/s 80-IA(4)(iii) due to one single reason only i.e. the Notification was not issued by the CBDT at the time of finalization of assessment. The Ld. AR submitted that there was no other reason to deny the deduction, in fact there cannot be any other reason because the assessee has already submitted all details of the “Devraj Industrial Park” not only to the CBDT but also to the Ld. AO by filing the aforesaid letter dated 25.02.2013 and 25.03.2013 which are very much embodied in the assessment-order itself. The Ld. AR further carried our attention to Para No. 4 on Page No. 2 to 22 of the appeal-order wherein the details of the project were fully available to the Ld. CIT(A). Therefore, the Ld. AR argued that all details were submitted before CBDT, Ld. AO and Ld. CIT(A) and nothing remains to be further verified. According to Ld. AR, the Ld. CIT(A) ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 7 - has therefore rightly allowed the deduction and his action must be upheld. 9. We have considered the rival submissions and contentions of both side and also perused the material held on record. We firstly observe that the Ld. AO has disallowed deduction for the sole reason that the notification required u/s 80-IA(4)(iii) was not issued by the CBDT till finalization of the assessment and there was no other reason. As discussed in the foregoing paragraphs, we also observe from the submissions made by the Ld. AR that the assessee has submitted full details of the park to the CBDT, Ld. AO and Ld. CIT(A). We also observe that the assessee has submitted audited P&L A/c, audited Balance-Sheet and Form 3CD alongwith the return. We also observe that the Hon’ble Gujrat High Court in its order dated 03.11.2017, para No. 31, reproduced above has mandated “The petitioner’s claim for deduction at whichever stage pending before the assessing or appellate authority shall be governed by this declaration”. In such circumstances we are inclined to hold that the Ld. CIT(A) has rightly allowed the deduction u/s 80-IA(4)(iii), as claimed by the assessee. Accordingly, we dismiss revenue’s Ground No. 1. 10. Therefore, revenue’s ITA No. 1607/Ahd/2018 for Assessment-Year 2010-11 is dismissed. ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 8 - 11. Now we take up the revenue’s appeal for Assessment-Year 2011-12 i.e. ITA No. 1359/Ahd/2017. ITA No. 1359/Ahd/2017 for Assessment-Year 2011-12: 12. In this Appeal, the revenue has raised following Grounds: “1. That the ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 27,72,21,458/- made u/s 80-IA(4)(iii) of the I.T. Act. 2. That the ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 4,70,567/- made u/s 80-IA of the I.T. Act. On the facts and in the circumstances of the case and in law, the CIT(A) ought to have upheld the order of the Assessing Officer to the extent mentioned above since the assessee has failed to disclose his true income / book profit. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored to the above extent. The appellant craves, to leave, to amend or alter any ground or add a new ground which may be necessary.” 13. As regards Ground No. 1, the facts and law are identical to the Assessment-Year 2010-11. Therefore following our view in earlier paragraph, we dismiss revenue’s Ground No. 1 of Assessment-Year 2011-12. 14. Now we take up Ground No. 2 of Assessment-Year 2011-12. The issue involved in this ground is whether the other income of Rs. 4,70,567/- earned by the assessee was eligible for deduction u/s 80-IA(4)(iii)? ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 9 - 15. During assessment-proceedings, the Ld. AO observed that the assessee has earned interest income of Rs. 4,70,567/- and claimed deduction in respect of the same. The Ld. AO disallowed deduction by observing that section 80-IA(4)(iii) allows deduction in respect of the profits and gains derived by an undertaking from the business of industrial park. According to Ld. AO, the phraseology of the section uses the words “derived from” as against “attributable to”. The Ld. AO observed that the words “derived from” are much narrower than the words “attributable to” and the benefit of deduction is available in respect of the income of the first degree only. Placing reliance on Pandian Chemicals Ltd. 262 ITR 278 (SC) and Sterling Foods 237 ITR 53 (SC), the Ld. AO held the income of Rs. 4,70,567/- earned by the assessee may be attributable to the business of development of industrial park, but it is certainly not derived from the said business and therefore not eligible for deduction. Hence the Ld. AO disallowed the deduction in respect of other income. 16. During appellate proceeding, the Ld. CIT(A) found that the Ld. AO had taken wrong impression that the other income is from interest. In fact, the other income consists of Kasar Vatav of Rs. 1,10,567/- plus dividend of Rs. 3,60,000/- from shares of the Kalupur Commercial Co-operative Bank acquired for availing secured loan for business purpose. The Ld. CIT(A) found that both of these incomes are derived from the business of industrial park ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 10 - and eligible for deduction. Therefore, the Ld. CIT(A) allowed deduction. 17. Before us, the Ld. DR submitted emphasized the decisions of Hon’ble Supreme Court in the case of Pandian Chemicals Ltd. 262 ITR 278 (SC) and Sterling Foods 237 ITR 53 (SC) and strongly claimed that the Kasar Vatav as well as Dividend are the income which are attributable to the business of industrial park but still they are not derived from that business. Hence the Ld. DR submitted that the Ld. CIT(A) has wrongly allowed deduction in respect of these incomes. 18. Per contra the Ld. AR submitted that Kasar Vatav is not an independent income. He submitted that the assessee purchases goods for “X” amount but pays “X(-)Y” amount after negotiations, this “Y” amount is “kasar vatav”. According to the Ld. AR, the assessee debits purchases at “X” amount in its P&L A/c and credits “Y” amount to its P&L A/’c under the heading “Kasar vatav”. By explaining this nature of Kasar Vatav, the Ld. AR submitted that amount “Y”, which is Kasar Vatav, is though credited to P&L A/c, in real sense it is a portion of purchase expenditure. The Ld. AR explained that Kasar Vatav ostensibly appears to be an independent income but it is not so. Regarding dividend income from shares, the Ld. AR submitted that the assessee has taken loan facility from Kalupur Commercial Co-operative Bank and it was the insistence of Kalupur Co-operative Bank that the assessee ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 11 - had to acquire those shares, else the assessee could not have been able to get loan. According to the Ld. AR, since the loan is taken exclusively for the business of industrial park and the acquisition of shares was a step in the process of taking loan, the dividend earned thereon is also derived from the business of industrial park. The Ld. AR further submitted that the decisions of Hon’ble Supreme Court in the case of Pandian Chemicals Ltd. 262 ITR 278 (SC) and Sterling Foods 237 ITR 53 (SC) did not deal with such peculiar fact and therefore not applicable to the dividend income earned by the assessee. With these submissions, the Ld. AR prayed that the other income consisting of kasar vatav and dividend on shares, is eligible for deduction u/s 80-IA(4)(iii) and the Ld. CIT(A) has rightly allowed the same. 19. We have considered the rival contentions of both sides. After due consideration we find sufficient force in the submission of the Ld. AR, without repeating the same, that the Kasar Vatav and Dividend income earned by the assessee, are derived from the business of industrial park and therefore eligible for deduction u/s 80-IA(4)(iii). Accordingly, we allow deduction and dismiss Ground No. 2 of Assessment-Year 2011-12. 20. Therefore, revenue’s ITA No. 1359/Ahd/2017 for Assessment-Year 2011-12 is also dismissed. ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 12 - 21. Now we take up the revenue’s appeal for Assessment-Year 2012-13 i.e. ITA No. 2441/Ahd/2017. ITA No. 2441/Ahd/2017 for Assessment-Year 2012-13: 22. In this Appeal, the revenue has raised following Grounds: “1. That the ld. CIT(A) erred in law and on facts in deleting the disallowance of deduction u/s 80-IA(4)(iii) amounting to Rs. 1,69,73,423/-. 2. That the ld. CIT(A) erred in law and on facts by allowing the deduction u/s 80IA(4)(iii) in as much as the CBDT notification was issued after the completion of assessment and that the same was contingent upon fulfillment of conditions which remain to be verified. 3. That the ld. CIT(A) has erred in law and on facts in holding that the assessee is entitled to deduction u/s 80-IA of the Act in respect of other income of Rs. 4,00,637/-. 4. That the ld. CIT((A) has erred in law and on facts in holding that bogus purchase of Rs. 91,18,800/- and bogus expenditure of Rs. 26,67,267/- are entitled for deduction u/s 80-IA of the Act. 5. That the ld. CIT(A) has erred in law and on facts in interpreting the CBDT Circular and the Act in as much as bogus purchases and expenditure are not related to “business activity against which Chapter VI-A has been claimed” and that deduction u/s 80-IA is not allowable for such bogus items. 6. The appellant craves to leave, to amend and / or to alter any ground or add a new ground which may be necessary.” 23. As regards Ground No. 1, 2 and 3, the facts and law are identical to the Assessment-Year 2011-12. Therefore following our view in earlier paragraphs, we dismiss revenue’s Ground No. 1, 2 and 3 of Assessment-Year 2012-13. ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 13 - 24. Now we take up Ground No. 4 and 5 of Assessment-Year 2012-13. 25. In these grounds, the issue involved is whether the bogus purchases of Rs. 91,18,800/- and bogus expenditure of Rs. 26,67,267/- are eligible for deduction u/s 80-IA(4)(iii)? 26. Facts qua this issue are such during assessment- proceeding, the Ld. AO observed that the assessee has recorded bogus purchases of Rs. 91,18,800/- and bogus expenditure of Rs. 26,67,267/-. While computing taxable income under the head “Income from Business or Profession” the Ld. AO made disallowance of these items and consequently the taxable profit of business was enhanced to that extent. However the Ld. AO did not allow deduction u/s 80-IA(4)(iii) on enhanced profit of business. 27. Before Ld. CIT(A), the assessee submitted Circular No. 37 / 2016 dated 02.11.2016, the relevant portion of which is reproduced below: “CIRCULAR NO. 37/2016 DATED 2-11-2016 Chapter VI-A 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 such disallowances is an increase in the profits. Doubts have been raised as to whether such higher ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 14 - profits would also result in claim for a higher profit-linked deduction under Chapter VI-A. 2. The issue of the claim of higher deduction on the enhanced profits has been a contentious one. However, the courts have generally held that if the expenditure disallowed is related to the business activity against which the Chapter VI-A deduction has been claimed, the deduction needs to be allowed on the enhanced profits. Some illustrative cases upholding this view are as follows: (i) If an expenditure incurred by assessee for the purpose of developing a housing project was not allowable on account of non-deduction of TDS under law, such disallowance would ultimately increase assessee'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) v. Keval Construction [2013] 33 taxmann.com 277 (Guj.) Commissioner of Income-tax-IV, Nagpur v. Sunil Vishwambharnath Tiwari [2016] 63 taxmann.com 241 (Bom.) (ii) If deduction under section 40A(3) of the Act is not allowed, the same would have to be added to the profits of the undertaking on which the assessee would be entitled for deduction under section 80-IB of the Act. This view was taken by the court in the following case: Principal CIT, Kanpur v. Surya Merchants Ltd. [2016] 72 taxmann.com 16 (All.). The above views have attained finality as these judgments of the High Courts of Bombay, Gujarat and Allahabad have been accepted by the Department. 3. In view of the above, 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 ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 15 - of the eligible business, and that deduction under Chapter VI-A is admissible on the profits so enhanced by the disallowance. 4. Accordingly, henceforth, appeals may not be filed on this ground by officers of the Department and appeals already filed in Courts/Tribunals may be withdrawn/not pressed upon. The above may be brought to the notice of all concerned.” On the basis of this Circular, the Ld. CIT(A) allowed deduction in respect of enhanced profit. 28. Before us, the Ld. DR supported the order of Ld. AO. As against this, the Ld. AR placed heavy reliance on the CBDT Circular and supported the order of Ld. CIT(A). 29. We have considered the submissions of both sides as also the aforesaid CBDT Circular No. 37 / 2016 dated 02.11.2016. We observe that the CBDT has clearly accepted that if the profit of business is enhanced by disallowances of expenses, such enhanced profit is eligible for deduction. Needless to mention that the Circulars issued by the CBDT are binding upon the lower authorities and so is the Circular No. 37 / 2016. At this stage, we also take note of the section 80AB which prescribes as under: “Deductions to be made with reference to the income included in the gross total income. 80AB. Where any deduction is required to be made or allowed under any section included in this Chapter under the heading "C.—Deductions in respect of certain incomes" in respect of any income of the nature ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 16 - specified in that section which is included in the gross total income of the assessee, then, notwithstanding anything contained in that section, for the purpose of computing the deduction under that section, the amount of income of that nature as computed in accordance with the provisions of this Act (before making any deduction under this Chapter) shall alone be deemed to be the amount of income of that nature which is derived or received by the assessee and which is included in his gross total income.” We observe that section 80-IA, with which we are concerned in this appeal, is included in Chapter VI-A under the heading “C. – Deduction in respect of certain incomes”. We also note that the section 80-IA(4)(iii) which is a part of section 80-IA allows deduction in respect of income derived from the business of industrial park which is included in the Gross Total Income of assessee. Hence section 80AB is directly applicable, which mandates that the income computed in accordance with the provisions of this Act shall be deemed to be the income derived from the business of industrial park. In the present case, the Ld. AO has computed the income of the business of industrial park after making the disallowances of bogus purchases of Rs. 91,18,800/- and bogus expenditure of Rs. 26,67,267/- and therefore the amount arrived at after making these disallowance i.e. the enhanced profit of the industrial park, is the income computed in accordance with the provisions of this Act. Hence such enhanced profit is deemed to be the income derived from the business of industrial park and eligible for deduction. In view of ITA Nos.1607/Ahd/2018, 1359/Ahd/2017& 2441/Ahd/2017 & Devraj Infrastructure Ltd. vs. DCIT/JCIT AYs – 2010-11, 2011-12 & 2012-13 - 17 - this, we find no infirmity in the action of Ld. CIT(A). Hence we hold that the profit of business enhanced by the disallowance of bogus purchases of Rs. 91,18,800/- and bogus expenses of Rs. 26,67,267/- is eligible for deduction u/s 80-IA(4)(iii). Accordingly, we dismiss the Ground No. 4 and 5 of revenue’s appeal for assessment-year 2012-13. 30. Therefore, the revenue’s ITA No. 2441/Ahd/2017 for Assessment-Year 2012-13 is also dismissed. 31. In the result, all three appeals of revenue are dismissed. This Order pronounced in Open Court on 16/03/2022 Sd/- Sd/- ( SUCHITRA KAMBLE ) ( BHAGIRATH MAL BIYANI ) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 16/03/2022 .सी.नाय , व. न.स./T.C. NAIR, Sr. PS देश े /Copy of the Order forwarded to : 1. ी ा / The Appellant 2. य / The Respondent. 3. स ! "# $य $य ु % / Concerned CIT 4. $य $य ु % ( ी ) / The CIT(A)-6, Ahmedabad 5. (व)ा*ीय न"#, $य ी य "# ण, हमदा!ाद / DR, ITAT, Ahmedabad 6. *ा./ 0ाई / Guard file. देशान ु सा / BY ORDER, स या( //True Copy// उ /सहा ंज ा (Dy./Asstt.Registrar) , हमदाबाद / ITAT, Ahmedabad