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Issues: Whether approval or registration as a 100% export-oriented undertaking was a prerequisite for claiming deduction under Section 10B of the Income-tax Act, 1961 for the assessment year 2005-06.
Analysis: Section 10B grants deduction to a hundred per cent export-oriented undertaking only when it has been approved by the competent Board. The definition in Explanation 2(iv) makes such approval an essential condition, and the benefit cannot arise before the approval is granted. The Court held that the statutory requirement could not be diluted by the CBDT circular or by applying a liberal construction contrary to the plain language of the provision. The reliance placed on earlier decisions was held inapplicable because the necessary conditions were not satisfied on the relevant date.
Conclusion: Approval by the competent authority was a mandatory pre-condition, and the assessee was not entitled to deduction under Section 10B for assessment year 2005-06.
Final Conclusion: The question of law was answered against the assessee, the Tribunal's order was set aside, and the Revenue's appeal succeeded.
Ratio Decidendi: Where a tax exemption provision expressly makes approval by the designated authority a condition for eligibility, the deduction cannot be claimed before such approval is obtained, and administrative circulars cannot override the statute.
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