Deduction claim under the correct provision must be examined on merits, despite an erroneous return entry.

An assessee engaged in software development had claimed deduction under section 10B, but contended that the correct claim was deduction under section 10A and that the original reference to section 10B was only a technical mistake. The Tribunal noted that sections 10A and 10B operate on different conditions and that the lower authorities had not examined eligibility under section 10A at all. It held that the assessee could not be confined to the wrong claim alone and that the correct claim had to be examined on merits after giving an opportunity to place evidence. The matter was therefore remanded to the Assessing Officer for fresh consideration of entitlement under section 10A.

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Issues: Whether the assessee's claim for deduction under section 10A of the Income-tax Act, 1961 could be examined when the return had erroneously claimed deduction under section 10B of the Income-tax Act, 1961, and the matter required remand to the Assessing Officer.

Analysis: The assessee was engaged in software development and had claimed deduction under section 10B, while its case before the appellate forum was that it was actually eligible for deduction under section 10A and the wrong claim was only a technical mistake. The lower authorities had proceeded only on the footing that the claim under section 10B was not allowable and had not examined whether the assessee satisfied the conditions for section 10A. The Tribunal held that the conditions for deduction under sections 10A and 10B stand on different footing, but the department could not insist that the assessee be confined to the wrong claim alone. Since entitlement under section 10A had not been examined, fairness required a fresh examination by the Assessing Officer after giving the assessee an opportunity to place evidence.

Conclusion: The issue was remanded to the Assessing Officer to decide afresh whether the assessee was entitled to deduction under section 10A.

Final Conclusion: The appeal was allowed to the extent of remand for reconsideration of the correct deduction claim, and the stay application became infructuous.

Ratio Decidendi: Where an assessee has made a wrong claim under one deduction provision but asserts eligibility under another applicable provision, the correct claim must be examined on merits and may not be rejected merely because it was not originally raised in the proper form.

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