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Issues: (i) Whether the assessee was entitled to exemption under section 10B or, alternatively, section 10A of the Income-tax Act, 1961 in respect of the claim for the relevant assessment year. (ii) Whether the reassessment initiated under section 147 of the Income-tax Act, 1961 was valid and whether the respondent could raise that challenge under rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963.
Issue (i): Whether the assessee was entitled to exemption under section 10B or, alternatively, section 10A of the Income-tax Act, 1961 in respect of the claim for the relevant assessment year.
Analysis: The assessee had been approved by STPI as a 100% export oriented unit and the same claim had been consistently accepted in earlier years. The Revenue did not establish any change in facts or law to justify departure from the earlier view. The assessee also had an alternate claim under section 10A, and the record showed that the eligibility conditions were examined. In these circumstances, the denial of exemption was not sustainable.
Conclusion: The assessee was entitled to the exemption, and the Revenue's challenge on this issue failed.
Issue (ii): Whether the reassessment initiated under section 147 of the Income-tax Act, 1961 was valid and whether the respondent could raise that challenge under rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963.
Analysis: The reassessment was founded on the same material that had been available and considered in the original assessment. No fresh tangible material was shown to support reopening, and the action amounted to a mere change of opinion. The respondent was permitted to support the order on the ground of invalid reopening under rule 27, and the objection was entertained. Since the statutory precondition for reopening was not satisfied, the reassessment could not stand.
Conclusion: The reopening under section 147 was held invalid, and the respondent's rule 27 objection succeeded.
Final Conclusion: The Revenue's appeal did not survive, and the assessee retained the benefit of the exemption while also succeeding on the challenge to reassessment.
Ratio Decidendi: Reassessment cannot be sustained in the absence of fresh tangible material and where the original assessment was reopened only on a different view of the same facts; consistently accepted exemption claims cannot be denied without a change in facts or law.
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