STP scheme approval is not enough for section 10B relief; alternate section 10A claim may still be remitted for review.

Approval under the STP scheme does not satisfy the statutory requirement for deduction under section 10B, which demands approval as a 100% export oriented undertaking by the Board appointed by the Central Government; the claim was therefore denied. An alternate claim for deduction under section 10A, based on the same record, could nevertheless be entertained where the relevant facts were already on record and the other side had an opportunity to respond; the matter was remitted for fresh examination of the section 10A eligibility conditions.

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Issues: (i) Whether deduction under section 10B of the Income-tax Act, 1961 was allowable to an undertaking approved under the STP scheme without approval by the Board appointed under the relevant law. (ii) Whether the assessee's alternate claim for deduction under section 10A of the Income-tax Act, 1961 could be entertained and remitted for fresh examination.

Issue (i): Whether deduction under section 10B of the Income-tax Act, 1961 was allowable to an undertaking approved under the STP scheme without approval by the Board appointed under the relevant law.

Analysis: The deduction under section 10B was claimed on the footing that the unit was registered as a 100% export oriented undertaking under the STP scheme. The statutory requirement, however, was approval as a 100% export oriented undertaking by the Board appointed by the Central Government. The approval issued under the STP mechanism was held not to be a substitute for the approval contemplated by section 10B.

Conclusion: Deduction under section 10B was rightly denied, and the Revenue succeeded on this issue.

Issue (ii): Whether the assessee's alternate claim for deduction under section 10A of the Income-tax Act, 1961 could be entertained and remitted for fresh examination.

Analysis: The alternate claim arose from the same record and concerned entitlement under a different provision. The Tribunal held that a fresh legal plea may be entertained even without a cross-objection where the necessary facts are on record and the other side is afforded an opportunity of hearing. On that basis, the matter was sent back for examination of the statutory eligibility conditions under section 10A.

Conclusion: The alternate claim under section 10A was entertained and remitted to the Assessing Officer for fresh consideration.

Final Conclusion: The disallowance under section 10B was sustained, but the assessee was given an opportunity to pursue an alternate deduction claim under section 10A before the Assessing Officer.

Ratio Decidendi: Approval under the STP scheme does not satisfy the statutory approval required for deduction under section 10B, and the Tribunal may entertain an alternate legal claim arising from the record and remand it for fresh adjudication when justice so requires.

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