2016 (6) TMI 1372 - HC - Income Tax

Court affirms Tribunal's decision on deduction under Income Tax Act, emphasizing consistent treatment. Revenue's challenge rejected.

The Court upheld the Tribunal's decision regarding the disallowance of deduction under Section 10B of the Income Tax Act, 1961. It emphasized the need for ... Disallowance of deduction u/s 10B - claim allowed for initial assessment year - HELD THAT:- the provision envisaged is for a period of ten consecutive years commencing from the first year during which the undertaking begins to manufacture or produce articles, things or computer software, as the case may be. When the Revenue therefore, did not question the certification by the Director, Software Technology Park of India, in the initial year of the claim made by the assessee as well as in the subsequent years, it would not be open for the Revenue to pick one year out of a total of ten consecutive years for different treatment that too without offering any explanation for the same - Decided against revenue Issues:- Disallowance of deduction under Section 10B of the Income Tax Act, 1961Analysis:1. The issue in this case revolves around the appellant's appeal against the Income Tax Appellate Tribunal's judgment concerning the disallowance of a deduction claimed under Section 10B of the Income Tax Act, 1961. The Revenue challenged the deletion of the disallowance amounting to Rs. 67,08,733, questioning the approval obtained by the assessee from the Director, Software Technology Park of India, as not meeting the requirements of Explanation 2 Clause (iv) to Section 10B of the Act.2. The Revenue argued that the approval certificate from a government authority like the Director, Software Technology Park of India, cannot substitute the authority specified in Clause (iv) of the explanation to Section 10B. However, the Court declined to delve into this argument due to the previous acceptance of the claim in the initial year and subsequent assessment years. Section 10B provides for deductions for export-oriented undertakings for ten consecutive years from the commencement of manufacturing or production, and the Revenue's inconsistency in challenging the certification was highlighted.3. The Court emphasized that the Revenue's selective challenge without any justification for singling out one year out of the ten consecutive years was not acceptable. Referring to precedents like the Gujarat High Court judgments in Saurashtra Cement & Chemical Industries Ltd. vs. CIT and Commissioner of Income Tax vs. M/s. T.J.Agro Fertilizers Pvt. Ltd., the Court underscored the principle of consistent treatment over the specified period. As a result, the Court dismissed the tax appeal, affirming the Tribunal's decision regarding the deduction under Section 10B of the Income Tax Act, 1961.