Section 10B deduction for an approved EOU runs from the unit's initial year, not the assessee's overall business start.

A 100% export oriented undertaking approved in 1997-98 was entitled to deduction under section 10B for the year in question because the exemption period had to be computed from the initial year of the eligible undertaking, not from the year the assessee began its overall business. Prior deduction under section 80HHE did not bar relief under section 10B where the statutory conditions were otherwise satisfied. As the Revenue did not dispute EOU approval and had denied the claim on an incorrect view of the ten-year period, the disallowance was unsustainable.

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Issues: Whether the assessee was entitled to deduction under section 10B for the assessment year under consideration.

Analysis: The assessee had obtained approval as a 100% export oriented undertaking and had established the eligible unit in 1997-98. The period of exemption under section 10B had to be reckoned from the initial year of the eligible undertaking, not from the year in which the assessee first commenced its overall business. The fact that the assessee had earlier claimed deduction under section 80HHE did not bar the claim under section 10B when the statutory conditions for that provision were satisfied. The record also showed that the Revenue did not dispute the approval as a 100% EOU, and the denial of relief was based on an erroneous view of the ten-year period and an unduly technical approach.

Conclusion: The assessee was entitled to deduction under section 10B for the year in question, and the disallowance made by the Revenue was not sustainable.

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