Indian Kanoon - Search engine for Indian Law

8. In nut shell, the deduction u/s. 80P case of assessee shall have been allowable on the extended income (generated by disallowing such expenses/provisions & contingencies). The said view finds support from the judgment of Jurisdictional Bombay High Court and Pune ITAT. An operating paragraphs of aforesaid judgments is reproduced for your kind perusal :-

CIT V/s Gem Plus Jewellery India Ltd. (330 ITR 175) High Court of Bombay :-

In this case Assessing Officer enhanced income by disallowing employer‟s as well as employee‟s contribution towards provident fund/ESIC, it was held that exemption under section 10A had to be granted on such enhanced income.

CIT V/s Bora Agro Foods (ITAT Pune) In this case the issue pertained to the claim of deduction u/s. 80A(4) in respect of the amount disallowed u/s. 40(a)(ia) of the Act. This issue was addressed in favour of the assessee by the Pune Bench by observing as under :-

3. Having gone through the first appellate order, we find that the issue raised is fully covered by the decision of Hon‟ble Jurisdictional High Court in the case of CIT Vs. Gem Plus Jewellery India Ltd. in ITA No. 2426 of 2009 dated 21.03.2010 holding that the appellant was eligible for additional claim u/s. 10A due to enhancement of income on account of disallowance u/s. 43B of the Act. The Hon‟ble High Court was pleased to hold therein that the enhancement resulted in increase in the business profit of the assessee which was eligible for deduction u/s 10A. The Bombay Bench of the Tribunal in the case of Saba Software Pvt. Ltd. Vs. ITO in ITA No. 1454/Bom/2009 dated 27/01/2010 has also given similar decision. Following these decisions as well as decision of Pune Bench of the Tribunal in case of Veritas Software India Ltd.

The Nirmal Ujwal Credit Co-operative Society Ltd. A.Y.2014-15 5.2 The appellant has also relied on the judgment of the Jurisdictional Pune Bench of ITAT in case of Jay Tula Bhavani Sah. Patpedhi V/s ITO, I.T.A. No. 979/PN/2010 dated 30.12.2011, which has also considered the judgment of the High Court in case of Gem Plus Jewellery India Ltd. holding that the deduction u/s. 80P shall be allowed on the extended income also. Similar view was also taken by Pune Bench in case of DCIT V/s. Bora Agro Foods in ITA No. 1438/PN/2010 dated 31.03.2011 5.3 I have gone through the difference judgments relied by the appellant. The section 4 of the Income Tax Act is a charging section. Section 5 lays down the scope of total income and section 14 classifies income under five heads on income. The statute also provides for certain „deductions in respect of certain incomes‟ this is provided under chapter VI-A. The chapter VI-A is further dividend in three parts (A, B & C). Part A provides general guidelines for computing deduction. Part B enlist all payments for which deduction can be claimed on payment bais from gross total income (e.g. deduction u/s. 80C). Part C enlist certain business and sector specific deductions. In present case deduction is claimed under section 80P which falls under Part C of the Chapter VI-A. The Part-A-which lays down mode of computation deduction, stipulates in section 80A(1) „In computing the total income of an assessee there shall be allowed from his gross total income, in accordance with and subject to the provision of this chapter, the deduction specified in 80C to 80U‟. Therefore, the act has clarified that deduction under chapter VI-A is allowed from gross total income. The Part A of Chapter VI-A also defines „gross total income‟ in section 80B(5), „gross total income means the total income computed in accordance with the provisions of the Act, before making deduction under this chapter‟. Therefore, the statute has clarified that the total income computed after applying all the provisions of the Act, will be considered as "Gross Total Income".

The Nirmal Ujwal Credit Co-operative Society Ltd. A.Y.2014-15 "3. Having gone through the first appellate order, we find that the issue raised is fully covered by the decision of Hon‟ble Jurisdictional High Court in the case of CIT Vs. Gem Plus Jewellery India Ltd., in ITA No. 2426 of 2009 dated 21-3-2010 holding that the appellant was eligible for additional claim us/. 10A due to enhancement of income of account of disallowance us/. 43B of the Act. The Hon‟ble Igh Court was pleased to hold therein that this enhancement resulted in increase in the business profit of the assessee which was eligible for deduction u/s 10A.