2014 (8) TMI 955 - AT - Income Tax

Allowability of deductions under section 10B - Held that - Even though the Revenue has raised the grounds that the Commissioner of Income-tax (Appeals) was not correct in holding that the assessee was eligible for exemption nothing was brought on record why the deduction under section 10B of the Act should be disallowed as the assessee had valid approvals from the authorities. - assessee was allowed deduction under section 10B of the Act in the earlier years also. In view of these facts since the assessee was allowed deduction in the earlier years on a valid approval obtained by it we see no reason to interfere with the order of the Commissioner of Income-tax (Appeals). - Decided against Revenue.

Summary

Issues involved:
Allowability of deductions under section 10B of the Income-tax Act.

Analysis:
The case involved an appeal by the Revenue against the order of the Commissioner of Income-tax (Appeals) concerning the allowability of deductions under section 10B of the Income-tax Act. The Assessing Officer initially denied the claim for deductions, stating that the approval of the board appointed by the Central Government as required under section 14 of the Industries (Development and Regulation) Act, 1951 was not available. However, the assessee argued that they had obtained permission from the director, STPI, which was further extended and ratified by the board appointed by the Central Government. The Assessing Officer disagreed, leading to the denial of the claim.

Before the Commissioner of Income-tax (Appeals), it was highlighted that the assessee had been granted deductions under section 10B in previous years by both the Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal. The Commissioner of Income-tax (Appeals) held that the assessee was indeed eligible under section 10B, especially considering the approvals obtained in previous years. The Revenue contended that the assessee was not eligible for exemption, but failed to provide any evidence as to why the deductions should be disallowed, given the valid approvals in place.

The Income-tax Appellate Tribunal, in a previous order, had already ruled in favor of the assessee, emphasizing that the approval from STPI for a 100% export-oriented undertaking was equivalent to approval by the board. The Tribunal stressed that the Commissioner of Income-tax should align with the view taken by the Assessing Officer, especially when two views are possible, as long as it is in line with the Tribunal's view. The Tribunal also cited a judgment by the Delhi High Court to support its decision. Considering the previous approvals and the lack of merit in the Revenue's arguments, the Commissioner of Income-tax (Appeals) upheld the deductions under section 10B for the assessee.

Ultimately, the Revenue's appeal was dismissed, affirming the order of the Commissioner of Income-tax (Appeals) in favor of the assessee. The decision was based on the valid approvals obtained by the assessee in previous years and the lack of substantial grounds presented by the Revenue to disallow the deductions under section 10B.