Tribunal grants deduction under section 80IB(3) for assessment years, emphasizing legislative intent for industrial growth.

The Tribunal allowed the appellant's appeals for assessment years 2010-11 and 2006-07, granting them the deduction under section 80IB(3). The Tribunal emphasized that if the initial conditions were met, the benefit of 10 years should be granted, and denying the benefit due to growth and exceeding limits would go against the legislative intent of providing incentives for industrial growth. Therefore, the impugned orders were set aside, and the deduction was restored for both assessment years.

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Issues:
- Appeal against orders of CIT(A) for assessment years 2010-11 & 2006-07 regarding deduction under section 80IB(3).

Analysis:

Issue 1: Deduction under section 80IB(3) for AY 2010-11
- The appellant challenged the denial of deduction of Rs. 4,13,58,579 under section 80IB(3) by the Assessing Officer (AO) and CIT(A) due to exceeding the limit of plant & machinery value. The Tribunal referred to a previous decision in the assessee's case for AY 2009-10 and a Karnataka High Court case, emphasizing that if the conditions were met initially, the benefit of 10 years should be granted. The Tribunal held that denying the benefit due to growth and exceeding the small scale industry limit would go against the legislative intent of providing incentives for industrial growth. Consequently, the Tribunal allowed the appeal, setting aside the impugned order and restoring the deduction.

Issue 2: Deduction under section 80IB(3) for AY 2006-07
- In the appeal for AY 2006-07, the AO initially allowed the deduction under section 80IB(3) but later reopened the assessment citing the plant & machinery value exceeding Rs. 1 crore. Following the decision on the AY 2010-11 issue, the Tribunal found in favor of the assessee, holding them entitled to the deduction under section 80IB(3) even for this assessment year. Consequently, the appeal for AY 2006-07 was also allowed.

In conclusion, both appeals by the assessee were allowed by the Tribunal, granting them the deduction under section 80IB(3) for both AY 2010-11 and AY 2006-07. The Tribunal's decisions were based on the interpretation of legislative intent and the continuity of benefits for small scale industries meeting the initial conditions, despite subsequent growth and exceeding limits.

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