Deduction claim withdrawal does not bar appellate challenge when statutory conditions for section 80IB are otherwise satisfied.

Withdrawal of a deduction claim by letter or revised return did not, by itself, bar the assessee from contesting eligibility before appellate authorities; the claim had to be tested on the statutory conditions. The Tribunal noted that a concession before the Assessing Officer does not defeat a lawful entitlement where the facts support the deduction. On merits, the assessee was found to have undertaken manufacturing through an industrial undertaking that was not formed by reconstruction, splitting up, or transfer of previously used plant and machinery. The deduction under section 80IB was therefore allowed and the denial was set aside.

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Issues: (i) Whether withdrawal of the deduction claim by letter and revised return barred the assessee from contesting the issue before the appellate authorities; (ii) Whether the assessee satisfied the conditions for deduction under section 80IB of the Income-tax Act, 1961.

Issue (i): Whether withdrawal of the deduction claim by letter and revised return barred the assessee from contesting the issue before the appellate authorities?

Analysis: The claim under section 80IB is governed by the statutory conditions and not by mere surrender or acquiescence. A concession made before the Assessing Officer does not extinguish an otherwise lawful entitlement if the facts and material on record show that the deduction is legally allowable. The Tribunal therefore treated the withdrawal as not conclusive and permitted the assessee to agitate the claim on merits.

Conclusion: The assessee was not precluded from raising the deduction claim before the appellate authorities.

Issue (ii): Whether the assessee satisfied the conditions for deduction under section 80IB of the Income-tax Act, 1961?

Analysis: The Tribunal found that the assessee had commenced manufacturing activity through an industrial undertaking, that the concern was not formed by reconstruction or splitting of an existing business, and that the machinery position did not show formation by transfer of previously used plant or machinery. The manufacturing activity and eligibility were also supported by the fact that the Department had allowed the claim in later assessment years on substantially similar facts. The assessee therefore fulfilled the statutory conditions for the deduction.

Conclusion: The assessee was eligible for deduction under section 80IB.

Final Conclusion: The denial of deduction was set aside, the assessee's appeal succeeded, and the Department's cross objection failed.

Ratio Decidendi: Statutory deduction cannot be denied merely because the assessee surrendered the claim before the Assessing Officer; if the legal conditions for the deduction are otherwise satisfied, the appellate authority must allow the claim on merits.

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