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CA Final · Direct Tax Laws & International Taxation · Deductions from Gross Total Income

Ananya Constructions claims a deduction for the tax year in respect of profits of Rs. 15,00,000 from a housing project that qualifies under section 142 of the Income-tax Act, 2025, which follows the section 80-IBA computation of the repealed Act. The same profits are also eligible for another Part C deduction. Which statement is correct as per section 122(4)?

Once profits are claimed and allowed as a deduction under Part C, no deduction on those same profits to that extent is allowed under any other provision for that tax year. Section 122(4) prevents double deduction and caps the deduction at the profits of the business.

  1. ABoth deductions may be claimed in full on the same profits
  2. BWhere the profits are claimed and allowed as a deduction under Part C, no deduction to that extent is allowed under any other provision for the yearCorrect
  3. CThe assessee may claim the second deduction on 50% of the profits
  4. DThe second deduction is allowed only if the first is below Rs. 10,00,000

Explanation

Section 122(4)(a) bars a second deduction on the same profits once they are claimed and allowed under Part C, to that extent, for that tax year. Section 122(4)(b) also caps the deduction at the profits of the undertaking or business. No 50% or Rs. 10,00,000 rule exists in the provision.

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