Reassessment deduction claim: assessee can seek section 10A relief for escaped income even after an earlier section 10B claim.

In reassessment under section 147 of the Income-tax Act, an assessee may raise an alternative claim for deduction under section 10A in respect of income already linked to an earlier section 10B claim, because reassessment is confined to escaped income and the assessee may contest the taxability of that same item. The earlier failure to claim section 10A in the original return does not by itself bar examination of the statutory benefit if it directly relates to the escaped income. The Assessing Officer must fairly consider the material supporting the deduction claim and examine it afresh.

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Issues: Whether, in reassessment proceedings under section 147 of the Income-tax Act, 1961, the assessee could raise an alternative claim for deduction under section 10A in respect of the same amount earlier claimed under section 10B, and whether the Assessing Officer was required to examine that claim.

Analysis: The reassessment was initiated to bring to tax income alleged to have escaped assessment. The governing principle is that reassessment proceedings are confined to escaped income, but an assessee may contend that the very item sought to be taxed is not taxable at all, including by asserting an available statutory deduction relating to that escaped income. The earlier claim under section 10B did not preclude examination of the alternative claim under section 10A, because the dispute still concerned the same income sought to be assessed in reassessment. The decision also follows the principle that the Assessing Officer must fairly consider the material supporting the statutory benefit claimed in relation to the escaped income.

Conclusion: The assessee was entitled to raise the section 10A claim in reassessment proceedings, and the Assessing Officer was directed to examine that claim afresh.

Ratio Decidendi: In reassessment proceedings, an assessee may raise a deduction or non-taxability claim that directly relates to the escaped income, and such a claim cannot be rejected merely because it was not made in the original return.

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