DCIT (OSD), Dehradun V. Shri. Ganesh Developers & Builders, Dehradun

ITA 3763/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 61735 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 25-06-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGHDR
• Keywords: Business income; Business expenditure
• Section: 80HHC; 80IB; 194C; 28; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI RAJPAL YADAV, JM & SHRI A.N. PAHUJA, AM ITA NO.3763/DEL/2011 ASSESSMENT YEAR:2007-08 D.C.I.T., (O.S.D.), RANGE-1, DEHRADUN V/S . M/S SHREE GANESH DEVELOPERS & BUILDERS, 6C,CROSS ROAD, DEHRADUN [PAN : ABBFS 0152 K] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI K. SAMPATH, AR REVENUE BY SHRI SATPAL SINGH,DR DATE OF HEARING 25-06-2012 DATE OF PRONOUNCEMENT 28-06-2012 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 05.08.2011 BY THE REVENUE AGAI NST AN ORDER DATED 10.05.2011 OF THE LD. CIT(A)-I, DEHRADUN, RAI SES THE FOLLOWING GROUNDS:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING THE APPEAL OF THE ASSESSEE BY HOLDING THAT DISALLOWANCE OF ` `74,57,575/- MADE U/S 40(A)(IA) BY THE AO AS TAX DEDUCTIBLE AT SOURCE U/S 194C WAS NOT DEDUCTED WHILE MAKING PAYMENT OF THE AFORESAID SUM OF ` `74,57,575/- AGAINST WHICH DEDUCTION U/S 80IB(10) WAS NOT ALLOWED BY THE ASSESSING OFFICER WOULD ALSO QUALITY FOR DEDUCTION U/S 80 IB. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S BY ALLOWING THE APPEAL OF THE ASSESSEE BY HOLDING THAT PAYMENT TO THE CONTRACTORS WHICH WAS SUBJECT MATTER OF ADDITION U/S 40(A)(IA) WAS DIRECTLY RELATED TO T HE CONDUCT OF ELIGIBLE BUSINESS WITHOUT APPRECIATING T HAT THE DISALLOWANCE MADE U/S 40(A) (IA) WAS AS SUCH NEVER RELATED TO THE ELIGIBILITY BUSINESS AND IN FA CT LD. CIT(A) HAS ALSO NOT APPRECIATED THAT THE DISALLOWAN CE ITA N O.3763 /DEL./2011 2 U/S 40(A)(IA) WAS MADE BECAUSE THERE WAS VIOLATION ON THE PART OF ASSESSEE IN NOT COMPLYING WITH THE PROVISIONS OF 194C AS CONTAINED CHAPTER XVII-B. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S IN NOT APPRECIATING THE CONTENTS OF SECTION 80IB WHICH PROVIDES THAT THE GROSS TOTAL INCOME OF AN ASSESSEE INCLUDES ANY PROFIT AND GAINS DERIVED FROM ELIGIBLE BUSINESS, THERE SHALL BE ALLOWED IN ACCORDANCE WITH AND SUBJECT TO PROVISION OF THIS SECTION, IN COMPUT ING THE TOTAL INCOME, A DEDUCTION FROM SUCH PROFIT AND /GAINS OF AMOUNT EQUAL TO THE PRESCRIBED PERCENTAGE ETC. LD. CIT(A) HAS THUS ERRED IN LAW IN HOLDING T HAT DISALLOWANCE MADE U/S 40(A)(IA) ON ACCOUNT OF VIOLATIONS OF THE PROVISIONS OF ACT WAS PROFIT AND GAIN DERIVED FROM CONDUCT OF ELIGIBLE BUSINESS. 4. WHILE ALLOWING THE APPEAL OF THE ASSESSEE LD. CI T(A) HAS NOT CONSIDERED THE DEFINITION OF THE EXPRESSION GROSS TOTAL INCOME AS CONTAINED IN SECTION 80B(5) READ WITH SECTION 80A(1) AND HAS SIMULTANEOUSLY NOT CONSIDERED THE FACT THAT AS PER SECTION 5, TOTAL IN COME HAS BEEN DEFINED TO BE, FROM WHATEVER SOURCE DERIVED, WHICH IS RECEIVED OR DEEMED TO BE RECEIVED OR WHICH ACCRUES OR ARISES OR DEEMED TO ACCRUE OR ARISE DURING THE PREVIOUS YEAR AND THUS ADDITION U/ S 40(A)(IA) CANNOT BE TERMED AS INCOME OF THE ASSESSE E DERIVED FROM ANY PARTICULAR SOURCE, WHICH IS RECEIV ED OR DEEMED TO BE RECEIVED OR ACCRUED OR DEEMED TO ACCRUE TO THE ASSESSEE AND THUS ADDITION MADE U/S 40(A)(IA) WOULD CERTAINLY NOT QUALIFY FOR DEDUCTION U/S 80 IB(10) OF THE IT ACT, 1961. THUS, THE ORDER OF LD. CIT(A) IS ERRONEOUS ON LAW. 5. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS THA T THE ADDITION MADE BY DISALLOWING EXPENDITURE INCURRED B Y THE ASSESSEE IN CONTRAVENTION OF THE PROVISIONS OF SECTION 40(A)(IA) IS PART OF ELIGIBLE DEDUCTION U/S 80 IB OF THE IT ACT, 1961 WHILE THE HONBLE APEX COURT IN THE CASE OF LIBERTY INDIA VS. CIT (2009) 183 TAXMAN 349(SC) HAD OCCASION TO HOLD THAT EVEN DUTY DRAW BACK BENEFIT ON ACCOUNT OF STATUTORY PROVISIONS IN CUSTOM ACT./SCHEME(S) FRAMED BY GOVERNMENT; THEREFORE, PROFITS SO DERIVED DO NOT FORM PART OF N ET PROFITS OF ELIGIBLE INDUSTRIA UNDERTAKING FOR PURPO SE SECTIONS 80 IB, 80- I AND 80-IA. ITA N O.3763 /DEL./2011 3 6. THE ORDER OF THE LEARNED CIT(A) BE SET ASIDE AND THAT OF THE AO BE RESTORED. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T E-RETURN DECLARING INCOME OF ` `4,96,68,230/- FILED ON 31.10.2007 BY THE ASSESSEE, ENGAGED IN THE BUSINESS OF DEVELOPING AND BUILDING OF A HOUSING PR OJECT, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) O F THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT), ISSUED ON 24. 09.2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O. IN SHORT) NOTICED THAT THE ASSESSEE MADE LABOUR CONTRACT PAYMENTS OF ` `74,57,575/- WITHOUT DEDUCTING TAX AT SOURCE IN TERMS OF PROVISIONS OF SECTION 194C OF THE ACT. TO A QUERY BY THE AO, SEEKING TO DISALLOW THE AMOUNT IN TERMS OF PRO VISIONS OF SEC. 40A(IA) OF THE ACT AND CONSEQUENT DEDUCTION U/S 80IB(10) OF THE AC T ON SUCH DISALLOWANCE, THE ASSESSEE WHILE RELYING UPON THE DECISION IN SWASTIK TEXTILES VS. INCOME-TAX OFFICER IN ITA NO.1018(JP) OF 1994 CONTENDED THAT D EDUCTION U/S 80 IB(10) MAY BE ALLOWED ON THE AMOUNT PROPOSED TO BE DISALLOWED U/S 40(A)(IA) OF THE ACT ALSO. HOWEVER, THE AO DID NOT ACCEPT THE SUBMISSIO NS OF THE ASSESSEE AND WHILE DISALLOWING THE CLAIM FOR DEDUCTION OF ` ` 74,57,575/- IN TERMS OF PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, DID NOT ALLOW DEDUCT ION U/S 80 IB(10) OF THE ACT ON THE ENHANCED INCOME AS A RESULT OF AFORESAID DISALL OWANCE, FOLLOWING HIS OWN DECISION FOR THE PRECEDING ASSESSMENT YEAR. 3. ON APPEAL, THE LEARNED CIT(A) ALLOWED THE CLAIM IN THE FOLLOWING TERMS: 1.2 THE MATTER HAS BEEN EXAMINED. ACCORDING TO T HE PROVISION OF SECTION 80 IB OF THE INCOME-TAX ACT, A N ASSESSEE IS ENTITLED TO DEDUCTION UNDER THAT SECTION IN RESPECT OF ITS PROFIT FROM THE ELIGIBLE BUSINESS, SUBJECT TO THE SATISFACTION OF OTHER CONDITIONS MENTIONED IN THAT SECTION. ONE OF THE ELIGIBLE BUS INESSES, AS PER SUB-SECTION (10) OF THAT SECTION IS DEVELOPING AND BUILDING HOUSING PROJECTS APPROVED BY LOCAL AUTHORITY BEFORE WHICH A CCRUES/ARISES TO THE ASSESSEE DIRECTLY FROM THE CONDUCT OF THE ELIGI BLE BUSINESS; ITA N O.3763 /DEL./2011 4 WHETHER SUCH PROFIT IS SHOWN BY THE ASSESSEE OR IS DISCOVERED BY THE ASSESSING OFFICER IN COURSE OF THE ASSESSMENT I S IMMATERIAL. SUCH PROFIT IS CALCULATED BY REDUCING THE EXPENDITU RE DIRECTLY RELATED TO THE ELIGIBLE BUSINESS FORM THE RECEIPTS DIRECTLY ATTRIBUTABLE TO IT. HERE, THE NATURE OF THE RECEIPT AND EXPENDITURE IS IMPORTANT; THE QUANTUM THEREOF IS NOT. THERE IS NO DISPUTE OVER T HE FACT THAT THE PAYMENT TO THE CONTRACTORS WHICH IS THE SUBJECT MAT TER OF ADDITION U/S 40(A)(IA) WAS DIRECTLY RELATED TO THE CONTACT O F ELIGIBLE BUSINESS. HENCE, ANY REDUCTION OR INCREASE IN SUCH EXPENDITUR E WOULD HAVE THE EFFECT OF INCREASING OR REDUCING THE NET PROFIT ACCORDINGLY. IN SO FAR AS THE ACT ALLOWS DEDUCTION EQUAL TO 100% OF SU CH PROFIT, ANY INCREASE OR DECREASE IN PROFIT ATTRIBUTABLE TO THE ADJUSTMENT MADE IN DIRECT RECEIPT/EXPENDITURE IN COURSE OF THE ASSESSM ENT WOULD DIRECTLY AND CORRESPONDINGLY AFFECT THE QUANTUM OF THE DEDUCTION. THE LAW DOES NOT ENVISAGE DISCRIMINATION BETWEEN TH E PROFIT WHICH IS CALCULATED AS PER ACCOUNTS AND THE PROFIT WHICH IS DETERMINED AS PER LAW. IN FACT, WHEN WE TALK OF PROFIT DERIVED FROM ELIGIBLE BUSINESS, WE TALK OF PROFIT AS COMPUTED UNDER THE PROVISION OF THE ACT AND NOT THE ONE APPEARING IN THE ASSESSEES ACC OUNTS. HENCE, IF THE APPLICATION OF THE PROVISION OF THE CORRESPO NDINGLY GO UP. IN OTHER WORDS, NO TAX LIABILITY CAN BE IMPOSED ON THE ASSESSEE IN RESPECT OF THE ADDITION MADE TO THE RETURN OF INCOM E WHILE THE ASSESSEE SATISFIES ALL THE CONDITIONS PRESCRIBED IN THE ACT IN RESPECT OF THE DEDUCTION IN QUESTION. THE ASSESSEES ELIGI BILITY FOR DEDUCTION IN RESPECT OF THE SAID CONDITION IS NOT D ISPUTED. IN VIEW OF THIS IT IS HELD, THE ASSESSING OFFICERS ACTION DEN YING THE BENEFIT OF THE ADDITION MADE U/S 40(1)(IA) OF THE I.T. ACT WAS WRONG. THE ADDITION IS DELETED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).AT THE OUTSET, BOTH THE PARTIES AGREED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION DATED 11 TH MARCH, 2011 OF THE ITAT IN THE ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 IN I.T.A. NO.4328/D/2009. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISION OF THE ITAT. I N THE PRECEDING YEAR WHILE ADJUDICATING A SIMILAR ISSUE, THE ITAT UPHELD THE F INDINGS OF THE LD. CIT(A) IN THE FOLLOWING TERMS:- 4. ON PERUSAL OF PARAGRAPH 7 OF THE CIT(A)S ORDE R, WE FIND THAT THE CIT(A) HAS OBSERVED THAT THERE WAS A LIABILITY UPON THE ITA N O.3763 /DEL./2011 5 ASSESSEE TO DEDUCT TAX AT SOURCE ON THE PAYMENT OF ` `7,23,081/- AND THE ASSESSEE WAS OBLIGED TO DEDUCT TAX AT SOURC E AND PAY THE SAME TO THE GOVERNMENT ACCOUNT. THE CIT(A) FURTHER OBSERVED THAT SINCE THIS HAS NOT BEEN DONE, THE DISALLOWANCE WAS CALLED FOR ACCORDING TO LAW. IT IS THUS SEEN THAT THE DISALLO WANCE OF PAYMENT OF ` ` 7,23,081/- MADE BY THE ASSESSING OFFICER HAS BEEN C ONFIRMED BY THE CIT(A). HOWEVER, CIT(A) FURTHER STATED THAT EVEN IF THIS DISALLOWANCE MADE BY THE AO IN TERMS OF SECTION 40( A)(IA) IS TAKEN INTO ACCOUNT, THE ASSESSED INCOME OF THE ASSESSEE S HALL BE INCREASED BY THAT AMOUNT WHICH WILL AUTOMATICALLY Q UALIFY FOR DEDUCTION U/S 80 IB(10) AS THE ASSESSEE HAS BEEN DE RIVING ITS INCOME ONLY FROM THE ELIGIBLE BUSINESS OF CONSTRUCT ION OF FLATS IN RESPECT OF WHICH THE ASSESSEE IS ENTITLED TO DEDUCT ION U/S 80 IB(10). IN THE LIGHT OF THIS VIEW TAKEN BY THE LEARNED CIT( A), IT IS CLEAR THAT DISALLOWANCE OF ` `7,23,081/- U/S 40(A)(IA) HAS BEEN UPHELD BY THE CIT(A) BUT, AT THE SAME TIME, HE DIRECTED THE AO TO ALLOW DEDUCTION U/S 80 IB(10) ON THIS AMOUNT IF THE ASSESSEE IS ENT ITLED TO DEDUCTION U/S 80 IB(10) OF THE ACT. WE, THEREFORE, REJECT TH IS GROUND OF APPEAL FILED BY THE REVENUE. BEFORE PARTING WITH THIS ISS UE, IT MAY BE OBSERVED THAT THE ASSESSEE HAS ALSO NOT FILED ANY A PPEAL AGAINST CIT(A)S ORDER IN HOLDING THAT DISALLOWANCE OF THE PAYMENT OF ` `7,23,081/- IN VIOLATION OF SECTION 40(A)(IA) WAS C ALLED FOR. 5.1 WE FIND THAT THE ITAT, AHMEDABAD BENCH VIDE TH EIR ORDER DATED 18-09-2009 IN THE CASE OF CHIRAG PLAST IN ITA NO.21 96/AHD/2009 FOR THE AY 2005-06, WHILE ADJUDICATING A SIMILAR ISSUE , CONCLUDED AS UNDER:- 6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RE CORD. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION OF 100% OF THE PROFITS AND GAINS DERIVED FROM ITS INDUSTRIAL U NDERTAKING. THE LEARNED AO FOUND THAT A SUM OF RS.1,25,073/- IS NOT ALLOWAB LE AS BUSINESS EXPENDITURE OF THE YEAR UNDER CONSIDERATION BECAUSE OF THE PROVISIONS OF SECTION 40(A)(IA) ARE THAT DEDUCTION IN RESPECT OF THIS BUSINESS EXPENDITURE WILL BE ALLOWED TO THE ASSESSEE IN THE SUBSEQUENT Y EAR WHEN TDS IN RESPECT OF THIS EXPENDITURE IS DEPOSITED BY THE ASS ESSEE. HOWEVER, THE LEARNED ASSESSING OFFICER HAS TREATED THIS AMOUNT O F DISALLOWABLE EXPENDITURE AS INCOME FROM OTHER SOURCES AND THEREB Y NOT ALLOWED DEDUCTION UNDER SECTION 80IB IN RESPECT OF THAT AMO UNT. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO CONFIRMED THE ABOVE ACTION OF THE LEARNED ASSESSING OFFICER ON THE GROUND THAT ALLOWANCE OF DEDUCTION UNDER SECTION 80IB IN THE YEAR WILL TANTA MOUNT TO DOUBLE DEDUCTION TO THE ASSESSEE. WE FIND THAT THE UNDISPU TED FACTS OF THE CASE ITA N O.3763 /DEL./2011 6 ARE THAT BUSINESS EXPENDITURE OF ELIGIBLE UNIT STAN DS DISALLOWED IN THE YEAR UNDER CONSIDERATION DUE TO APPLICATION OF PROVISION S OF SECTION 40(A)(IA). THUS, IN OTHER WORDS, THE SAID AMOUNT IS DEEMED AS EXPENDITURE NOT INCURRED BY THE ASSESSEE FOR COMPUTING ITS BUSINESS INCOME. THUS, AS THE EXPENDITURE OF ELIGIBLE UNIT STANDS DISALLOWED CONS EQUENTLY THE SAME RESULTS IN INCREASE OF THE PROFIT OF THE ELIGIBLE U NIT. THE DEDUCTION UNDER SECTION 80IB IS ALLOWABLE IN RESPECT OF PROFITS AND GAINS DERIVED FROM THE INDUSTRIAL UNDERTAKING. SUCH PROFITS AND GAINS ARE TO BE COMPUTED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 28 TO 44A C WHICH INCLUDES SECTION 40(A)(IA) ALSO. THEREFORE, ANY DISALLOWANCE OF BUSINESS EXPENDITURE OF THE ELIGIBLE UNIT WILL LOGICALLY RES ULT IN ENHANCEMENT OF DEDUCTION ALLOWABLE UNDER SECTION 80IB OF THE ACT. THE FEAR EXPRESSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN OUR CONSIDERED OPINION IS UNFOUNDED AND BASELESS. DURING THE YEAR AS THE EXPENDITURE OF THE ELIGIBLE BUSINESS IS DISALLOWED THE ASSESSEE'S BUSINESS INCOME DERIVED FROM THE ELIGIBLE BUSINESS OF THE INDUSTRIA L UNDERTAKING STANDS AT INCREASED FIGURE AND THEREFORE, THE ASSESSEE WILL B E ELIGIBLE FOR DEDUCTION OF ENHANCED AMOUNT UNDER SECTION 801B OF THE ACT. HOWEVER, IN THE SUBSEQUENT YEAR IN WHICH TDS IS PAID BY THE ASSESSE E, THE EXPENDITURE WILL BE ALLOWED AS DEDUCTION FROM THE ELIGIBLE PROF ITS OF THE SUBSEQUENT YEAR AND THEREBY THE ELIGIBLE PROFIT OF THE INDUSTR IAL UNDERTAKING WILL BE REDUCED IN THE SUBSEQUENT YEAR AND CONSEQUENTLY THE ASSESSEE WILL BE ELIGIBLE FOR DEDUCTION UNDER SECTION 80IB AT THE RE DUCED AMOUNT ONLY. THUS, THERE CANNOT BE A DOUBLE DEDUCTION TO THE ASS ESSEE. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORI TIES AND DIRECT THE LEARNED ASSESSING OFFICER TO ALLOW DEDUCTION UNDER SECTION 80IB IN RESPECT OF ENTIRE PROFIT DERIVED FROM INDUSTRIAL UN DERTAKING AFTER TAKING INTO CONSIDERATION THE PROVISIONS UNDER SECTION 40(A)(IA ). THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 5.2 . HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS.HMT LTD., 203 ITR 811(KAR) HELD THAT FOR THE PURPOSES OF SECTIONS 8 0J AND 80HH OF THE ACT, PROFITS AND GAINS OF NEW UNDERTAKINGS ARE NOT COMMERCIAL PR OFITS BUT ONLY SUCH PROFITS AS ARE COMPUTED IN THE MANNER LAID DOWN UNDER THE A CT IN PURSUANCE OF SECTION 80AB, AS IF EACH UNDERTAKING WAS A SEPARATE ASSESSE E . WE FIND THAT THE DELHI BENCH OF THE TRIBUNAL IN THE CASE KOMAL EXPORTS VS ACIT, 19 SOT 602 (DEL.) IN THE CONTEXT OF PROVISIONS OF SEC 80HHC OF THE ACT H ELD AS UNDER:- 11. IN THE INSTANT CASE, WE FOUND FROM THE RECORD THAT THE TAX PAYER IS AN EXPORTER AND HAD FILED A RETURN AT LOSS OF RS.47,27 ,650/-. THE TAX PAYER BEING EXPORTER IS ELIGIBLE TO CLAIM DEDUCTION U/S 8 0HHC SUBJECT TO THE CONDITIONS STIPULATED IN THE SAID SECTION. SINCE TH E DEDUCTION UNDER CHAPTER VI-A IS ADMISSIBLE ONLY WHEN THERE IS POSITIVE GROS S TOTAL INCOME, THE TAX ITA N O.3763 /DEL./2011 7 PAYER OBVIOUSLY COULD NOT HAVE CLAIMED DEDUCTION UN DER SECTION 80HHC WHILE FILING THE RETURN OR BEFORE THE A.O. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS. IT IS SEEN THAT AS AGAINST THE LOSS RE TURNED AT RS.47,27,650/- ASSESSMENT HAS BEEN MADE AS POSITIVE INCOME OF RS.3 3,37,050/-. THEREFORE, THE CLAIM OF THE TAX PAYER REGARDING THE DEDUCTION UNDER SECTION 80HHC NEEDS TO BE RE-COMPUTED WITH REFERENCE TO THE FINALLY ASSESSED INCOME. WE DIRECT ACCORDINGLY. 5.3 SIMILAR VIEW WAS TAKEN BY THE ITAT, MUMBAI B ENCH IN THE CASE OF M/S. ZENITH RUBBER & PLASTIC WORK, 35 TTJ 259. 5.4 ON A SIMILAR ISSUE IN THE CONTEXT OF CLA IM FOR DEDUCTION U/S 80HHC OF THE ACT ON THE ADDITIONS TO THE INCOME MADE BY THE AO, HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. BAWA SKIN COMPANY, 294 ITR 537(PUNJAB & HARYANA) HELD THAT IF THE PROFITS SO A RRIVED AT BY THE ASSESSING OFFICER ARE RELATED TO THE BUSINESS OF THE ASSESSEE WHICH IS ENGAGED IN THE BUSINESS OF EXPORT OUT OF INDIA OF ANY GOODS OR MER CHANDISE TO WHICH SECTION 80HHC IS APPLICABLE, THEN THE APPELLANT IS COMPLETE LY JUSTIFIED TO MAKE THE CLAIM OF DEDUCTION OF SUCH PROFITS AS DETERMINED BY THE A SSESSING OFFICER. 5.5 IN THE INSTANT CASE ALSO, THE ASSESSEE DI D NOT DISPUTE THE DISALLOWANCE MADE BY THE AO IN TERMS OF PROVISIONS OF SEC. 40A( IA) OF THE ACT ,AS WAS ALSO THE CASE IN THE PRECEDING ASSESSMENT YEAR. ONLY DIS PUTE IS WITH REGARD TO DEDUCTION U/S 80IB(10) ON THE AMOUNT DISALLOWED U/S 40A(IA) OF THE ACT. INDISPUTABLY, THE ASSESSEE IS DERIVING ITS INCOME O NLY FROM THE ELIGIBLE BUSINESS OF CONSTRUCTION OF FLATS IN RESPECT OF WHICH THE AS SESSEE IS ENTITLED TO DEDUCTION U/S 80 IB(10) OF THE ACT. THERE IS NOTHING TO SUGGEST THAT THE AMOUNT DISALL OWED U/S 40A(IA) OF THE ACT IS NOT RELATED TO THE BUSINE SS OF THE INDUSTRIAL UNDERTAKING. ANY DISALLOWANCE OF EXPENDITURE OF THE ELIGIBLE UNI T RESULTS IN ENHANCEMENT OF DEDUCTION ALLOWABLE UNDER SECTION 80IB(10) OF THE A CT. IN VIEW OF THE FOREGOING AND IN THE LIGHT OF AFORESAID DECISIONS, INCLUDING THE AFORESAID DECISION OF THE ITAT IN THE PRECEDING YEAR, WE HAVE NO HESITATIO N IN UPHOLDING THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE IS ENTITLED TO DED UCTION U/S 80IB(10) OF THE ACT ON THE AMOUNT DISALLOWED U/S 40A(IA) OF TH E ACT WHILE ITA N O.3763 /DEL./2011 8 WORKING OUT THE ELIGIBLE PROFITS OF THE INDUSTRIAL UNDERTAKING. THEREFORE, GROUND NOS.1 TO 5 IN THE APPEAL ARE DISM ISSED. 6. GROUND NO.6 IN THE APPEAL BEING GENERAL IN NATU RE, DOES NOT REQUIRE SEPARATE ADJUDICATION AND IS, ACCORDINGLY, DISMISS ED. 7. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US 8. IN THE RESULT, APPEAL IS DISMISSED. SD/- SD/- (RAJPAL YADAV) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. D.C.I.T., (O.S.D.),RANGE-1,DEHRADUN 3. CIT CONCERNED 4. CIT (A)-I, DEHRADUN 5. DR, ITAT,C BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT