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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether an assessee, once found eligible for deduction under Section 80-IB, continues to be entitled to the deduction for the full period of ten consecutive assessment years even if it ceases to satisfy the definition of a small scale industrial undertaking during that period.
Analysis: Section 80-IB grants deduction for ten consecutive assessment years, subject to the conditions specified in the provision. The requirement in sub-section (3)(ii) is to satisfy the eligibility conditions at the outset; the section does not state that the assessee must continue to remain a small scale industrial undertaking throughout the ten-year period. The definition in Section 80-IB(14)(g), read with the reference to Section 11B of the Industries (Development and Regulation) Act, 1951, is relevant to initial eligibility, but the provision contains no indication that subsequent growth beyond the prescribed limit cuts off the deduction midstream. As an incentive provision, it must be construed in a manner consistent with the legislative object of encouraging industrial growth.
Conclusion: The assessee remains entitled to deduction under Section 80-IB for the stipulated ten consecutive assessment years once the initial conditions are satisfied; the question was answered in favour of the assessee and against the Revenue.
Ratio Decidendi: A deduction granted under an incentive provision for a fixed block of consecutive years cannot be denied midway merely because the undertaking later ceases to answer the statutory description that qualified it at the commencement of the deduction period, unless the statute expressly so provides.
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