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CS Executive · Tax Laws and Practice · Deductions

Meridian Pvt Ltd earns profits of Rs 40 lakh from an eligible unit and claims and is allowed a deduction of the entire Rs 40 lakh under a provision of Part C of Chapter VIII of the Income-tax Act, 2025 for the tax year. Which statement is correct?

Once profits of an undertaking or unit are claimed and allowed as a deduction under Part C, no deduction for those same profits, to that extent, is allowed under any other provision of the Act for that tax year. Double deduction is prohibited, though claiming up to the full profits is permitted.

  1. AThe same Rs 40 lakh profits can also be claimed again under another provision of the Act for that tax year
  2. BHalf of the profits may be claimed under another provision for that tax year
  3. CNo deduction in respect of those profits to that extent is allowed under any other provision for that tax yearCorrect
  4. DThe deduction under Part C is disallowed because it equals the profits of the unit

Explanation

Section 122(4)(a) bars a second deduction under any other provision, to the extent of the same profits and gains, for that tax year. Double claiming is therefore not permitted. Allowing the deduction equal to the profits is fine, since the deduction cannot exceed the profits.

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