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The Board has accepted the settled position "that the disallowances made under Section 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 of the eligible business, and that deduction under Chapter VI-A is admissible on the profits so enhanced by the disallowance".

Shanti Prime Publication Pvt. Ltd.

Section 28(i) of the Income-tax Act, 1961—Business income - Disallowances made under Section 32, 40(a)(ia), 40A(3), 43B, etc. 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 of the eligible business, and that deduction under Chapter VI-A is admissible on the profits so enhanced by the disallowance

Facts: Assessee, a joint venture between the Tata group and the Delhi Government and is in the business of distribution of electricity in north and north-west area of Delhi. An assessment order was passed under section 143(3) whereby the total income of the assessee was computed at Rs. 139,21,95,000/- and additions were made inter alia on the ground of (a) derecognition of revenue: Rs. 78,91,50,000 and (b) disallowance under section 80 IA of Rs. 35,71,77,686/-. In the appeal preferred before the Commissioner of Income-tax , assessee succeeded and vide order dated 30th July, 2013 the above noted additions were deleted. Thereafter, the assessee and the revenue preferred appeals before the ITAT. The common issues pertaining to abovenoted additions were identified and decided. The issues were decided in favour of the assessee. The Revenue has preferred the present appeal impugning the order passed by the Tribunal qua the aforenoted issues.

Held, that the Board has accepted the settled position "that the disallowances made under Section 32, 40(a)(ia), 40A(3), 43B, etc. 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 of the eligible business, and that deduction under Chapter VI-A is admissible on the profits so enhanced by the disallowance". In light of the CBDT Circular, all the issues become academic in nature and therefore, need no separate adjudication, though it would be pertinent to mention here that all the disputed issues remain open for both the parties in case the deduction u/s 801A is denied by the Hon'ble Superior Court. - DEPUTY CIT V/s TATA POWER DELHI DISTRIBUTION LTD. - [2020] 23 ITCD Online 157 (DEL)