Section 10B deduction for STPI-approved export unit upheld despite CBDT clarification pointing to section 10A

An STPI-approved 100% export oriented unit was considered eligible for deduction under section 10B of the Income-tax Act, 1961 despite a CBDT clarification indicating that Software Technology Park units would fall under section 10A. The Tribunal relied on press notes showing that STPI units could claim benefits under the 100% EOU scheme and on a later Department of Commerce communication stating that no Board of Approval ratification was required and that the competent committee could approve such claims. On that basis, the assessee's entitlement to section 10B deduction was accepted.

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Issues: Whether the assessee, being a STPI-approved 100% export oriented unit, was entitled to deduction under section 10B of the Income-tax Act, 1961 notwithstanding the CBDT clarification suggesting applicability of section 10A.

Analysis: The Tribunal noted that the CBDT clarification stated that a unit set up in a Software Technology Park would be eligible under section 10A and not section 10B. However, the press notes placed on record indicated that STPI units could claim benefits under the 100% EOU scheme, and a later communication from the Department of Commerce stated that no approval or ratification by the Board of Approval was required and that the competent committee could grant approval for STPI units to claim benefits under the 100% EOU scheme. In view of these materials, the assessee's claim was found to be justified.

Conclusion: The assessee was held entitled to deduction under section 10B of the Income-tax Act, 1961.

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