Rectification of wrongly ignored deduction claim under Section 80IB led to quashing of the consequential demand.

A deduction claim under Chapter VIA, including Section 80IB of the Income-tax Act, was stated to have been wrongly ignored in the return processing. Once the Revenue accepted that this was an obvious mistake, rectification was required and the consequential demand could not survive. The Court directed correction of the assessment error, after which the impugned orders and demand were liable to be set aside. The petition was disposed of with consequential relief flowing from the allowed deduction claim.

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Issues: Whether the assessee was entitled to deduction under Section 80IB of the Income-tax Act, 1961 as claimed in the return and whether the refusal to grant the deduction, leading to the demand, warranted correction and consequential relief.

Analysis: The return disclosed a claim for deduction under Chapter VIA, including Section 80IB, and the Revenue ultimately ed that there was an obvious mistake in not granting the deduction. On that basis, the Court directed the respondent to rectify the error and thereafter pass the consequential order. Since the demand would not survive after rectification, the impugned orders and demand were liable to be set aside.

Conclusion: The assessee succeeded. The refusal to allow the deduction was directed to be rectified, and the impugned orders and demand were quashed and set aside.

Final Conclusion: The petition was disposed of with directions to rectify the assessment error and grant the consequential relief flowing from the allowed deduction claim.

Ratio Decidendi: When the Revenue accepts that a deduction claim was wrongly ignored, the assessment and consequential demand must be rectified and cannot be sustained.

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