Disallowance made u/s 40(a)(ia) in respect of expenditure for the purpose of developing housing projects would qualify for deduction u/s 80IB(10):

AO made disallowance u/s 40(a)(ia) in respect of expenditure incurred by the assessee for the purpose of developing housing projects since the assessee had not deducted tax at source as per the requirements of the Act. Hon’ble High Court held that such disallowance would ultimately go to increase the assessee’s profit from the business of developing housing projects. Deduction u/s 80IB(10) was already allowed to the assessee by following the decision in the case of “CIT vs. Radhe Developers – 341 ITR 403 (Guj)”. Hence, profit computed after disallowance u/s 40(a)(ia) would qualify for deduction u/s 80IB(10). Revenue’s appeal was dismissed accordingly.

[ITO Vs. KEVAL CONSTRUCTION - TAX APPEAL NO.443 of 2012 – GHC]