Case Law Details
Brief of the Case
ITAT Ahmedabad held in the case Madhav Corporation vs. ACIT that the assessee has earned additional income which amount is disclosed consequence upon the search, hence it partakes the character of business income. Such amount has direct and proximate connection with the normal business/development activities, hence as eligible for deduction u/s. 80IB (10). Once on the basis of declaration of the assessee, the income of the assessee was accepted and has been assessed, the department has only disputed the factum that the project undertaken by the assessee firm is not eligible for housing project u/s. 80IB. The head of income has to be determined from the nature of business which assessee was being carried at the time of search. Therefore, additional income disclosed by the assessee being part and parcel of business income only i.e. already disclosed by the assessee firm during the course of search has been business income and the assessee is eligible for deduction u/s. 80IB(10).
Facts of the Case
The assessee firm carries on the business of development and construction of residential houses. During the year under consideration, the assessee has undertaken the construction work of a housing project known as ‘’Madhav Park’’. On 21/07/2011 a search operation was conducted at the business premises of the assessee firm and partners residence premises. During the course of search proceedings certain incriminating materials were found and seized by the department. The assessee firm was issued notice under section 153A (1)(a) to file block return of income. The assessee firm has filed return for the block period showing total income at Rs.NIL after claiming deduction u/s 80IB(10) of Rs.5,65,48,683/- for A.Y. 2008-09 incorporating the income generated out of the regular books of account as well as income appearing in the incriminating materials.
The assessee firm’s claim of deduction u/s 80IB (10) was rejected by the Assessing Officer considering the assessee firm as a ‘’contractor’’ and not as a ‘’developer’’ as the land was not owned by the assessee firm. Also additional claim of deduction u/s 80IB (10) on the basis of seized records was also rejected.
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