Deduction under section 10B for Unit II required direct evidence, so the matter was remanded for fresh adjudication.

Eligibility for deduction under section 10B in relation to Unit II could not be conclusively determined on the existing record because the decisive direct evidence, namely the application or letter made to the competent authority when Unit II was set up, was not before the Tribunal. The self-serving note in the accounts was found unreliable, and the assessee's reliance on separate identity and past consistency did not resolve the factual controversy after the High Court's remand. Authorities on reconstruction of business also did not answer the issue on the available material. The matter was therefore restored to the Assessing Officer for fresh adjudication by a speaking order after affording a reasonable opportunity of hearing.

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Issues: Whether the assessee's claim for deduction under section 10B in respect of the profit-making unit could be decided on merits on the existing record, or whether the matter had to be restored for fresh examination because the direct evidence necessary to determine the status of Unit II was not available.

Analysis: The Tribunal noted that the earlier order had been set aside by the High Court and that the issue had to be decided on merits. The Revenue relied on the assessee's own notes and the approval/green-card material to contend that Unit II formed part of the same eligible undertaking, while the assessee relied on the separate identity of Unit II and on past consistency. The Tribunal held that the self-serving note in the accounts was not reliable direct evidence and that the crucial document was the application/letter made to the competent authority at the time of setting up Unit II, which was not on record. In the absence of that direct evidence, and since the earlier consistency-based approach had not been approved by the High Court, the issue could not be conclusively determined on the present material. The Tribunal further held that authorities and precedents cited on reconstruction of business did not resolve the factual controversy on the existing record.

Conclusion: The matter was restored to the Assessing Officer for fresh adjudication by a speaking order after giving the assessee a reasonable opportunity of hearing.

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