Strict Interpretation of Exemption Provisions: Supreme Court's Ruling on Section 10B(8) of the Income Tax Act

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..... return of income is mandatory or directory in nature. The Court's decision has significant implications for assesses seeking exemption under this provision. Arguments Presented Revenue's Contentions The Revenue argued that the assessee failed to comply with the twin conditions u/s 10B(8) of the IT Act, namely, furnishing a declaration to the Assessing Officer in writing and submitting the declaration before the due date for filing the original return of income. The Revenue contended that both conditions are mandatory, and non-compliance should result in the denial of exemption u/s 10B(8). The Revenue further argued that filing a revised return u/s 139(5) of the IT Act, claiming the benefit of carrying forward losses, is impermissibl .....

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..... rding used for both conditions is similar. The Court further held that filing a revised return u/s 139(5) of the IT Act, claiming the benefit of carrying forward losses, is impermissible when the original return did not claim such a benefit. The revised return can only substitute the original return and cannot be used to introduce a new claim or withdraw an earlier claim. Analysis and Decision by the Court The Supreme Court's decision emphasizes the strict interpretation of exemption provisions in tax statutes. The Court reiterated the principle that exemption provisions must be strictly and literally complied with, and the assessee claiming exemption has to satisfy all the conditions mandated by the provision. The Court distinguished t .....

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..... arifies the interpretation of Section 10B(8) of the Income Tax Act, 1961 . The Court held that for claiming the benefit u/s 10B(8) , the twin conditions of furnishing a declaration to the Assessing Officer in writing and submitting the declaration before the due date for filing the original return of income u/s 139(1) are mandatory and must be strictly complied with. The Court rejected the assessee's argument that the time limit for filing the declaration is directory in nature, emphasizing that both conditions are mandatory and must be strictly construed in the context of exemption provisions. The Court also held that filing a revised return u/s 139(5) of the IT Act, claiming the benefit of carrying forward losses, is impermissible whe .....

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