Court directs grant of approval to petitioner under Income-tax Act, emphasis on Assessing Officer's role in determining concessions.

The court directed the authorities to grant approval to the petitioner for the disputed assessment years under section 36(1)(viii) of the Income-tax Act, emphasizing that approval did not automatically entitle the petitioner to concessions. The Assessing Officer would determine the concession's applicability during assessment proceedings. The judgment underscored the importance of transparent application of norms and the Assessing Officer's role in determining concessions. The writ petitions were allowed, and each party was directed to bear its respective costs.

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Issues:
1. Approval under section 36(1)(viii) of the Income-tax Act for assessment years 1995-96, 1996-97, and 1997-98.

Analysis:
The petitioner, a limited company, sought approval under section 36(1)(viii) of the Income-tax Act for providing long-term finance for construction or purchase of houses for residential purposes. The Central Board of Direct Taxes had approved the petitioner for subsequent assessment years but refused approval for the years 1995-96, 1996-97, and 1997-98. The petitioner filed a writ petition challenging this decision, which led to a remand for reconsideration by the authorities.

The central issue revolved around the application of internal norms by the respondent authority for granting approval. The petitioner argued that these norms were not publicized, causing prejudice. The court noted that the norms were not uniformly applied and questioned their necessity for approval under section 36(1)(viii). Referring to a Supreme Court judgment, the court emphasized that conditions imposed for deductions should not curtail the scope of the section. Grant of approval did not automatically entitle the petitioner to concessions; it was subject to scrutiny during assessment proceedings.

Considering the objectives of section 36(1)(viii), previous approvals, and the safeguards in assessment proceedings, the court directed the authorities to grant approval to the petitioner for the disputed assessment years. The court clarified that its approval did not imply automatic concession and that the Assessing Officer would determine the concession's applicability in accordance with the law and the Act's provisions.

In conclusion, the writ petitions were allowed, and each party was directed to bear its respective costs. The judgment highlighted the importance of transparent application of norms, the scope of deductions under the Income-tax Act, and the Assessing Officer's role in determining concessions during assessment proceedings.

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