Deeming Fiction Under Section 50 Does Not Extend To Section 74

BACKGROUND

• Seaview Developers Pvt. Ltd. (‘Assessee’) was engaged in the business of developing and leasing commercial real estate property in India, particularly an SEZ project in Uttar Pradesh. Being an SEZ developer/operator, the Assessee was eligible to claim deduction under section 80-IAB of the Income-tax Act, 1961 (the ‘Act’) for profits derived from development and operation of the SEZ.
• For AY 2017-18, the Assessee filed its return declaring total income of INR 4.33 crore under normal provisions and book profit of INR 59.12 crore under section 115JB of the Act. The assessment was completed under section 143(3), making various additions/disallowances, including levy of buyback tax under section 115QA on capital reduction, disallowance of interest relating to capital reduction, interest on CCDs, etc.