CS Executive · Tax Laws and Practice · Deductions
Ananya Developers Ltd has an eligible business whose profits are ₹60 lakh. It is claimed and allowed as a deduction under Part C of the Chapter for the tax year. Ananya also seeks to claim a deduction for the same ₹60 lakh under another provision of the Act. Which statement is correct under section 122(4) of the Income-tax Act, 2025?
No deduction on those same profits is allowed under any other provision for that tax year. Section 122(4) of the Income-tax Act, 2025 prevents double benefit: once profits are allowed as a Part C deduction, the same profits cannot be deducted again, and the deduction cannot exceed those profits.
- ANo deduction on those same profits is allowed under any other provision for that tax yearCorrect
- BA second deduction is allowed but limited to 50% of the profits
- CA second deduction is allowed if the first claim is below 100% of profits
- DA second deduction is allowed if the assessee pays additional tax
Explanation
Section 122(4)(a) states that where profits of an undertaking or eligible business are allowed as a deduction under Part C, deduction in respect of such profits to that extent is not allowed under any other provision for that tax year. Also, under (b) the deduction cannot exceed those profits. Hence double deduction is barred.
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