Statutory approval for export deduction must meet the specific provision's authority requirement; STPI registration is not enough.

Deduction under section 10B requires approval of a 100% export-oriented undertaking by the prescribed statutory authority, and STPI approval alone is not equivalent to that approval; the claim under section 10B therefore fails. An alternate claim under section 10A, having been raised before the Assessing Officer and appellate authority, may be examined on its statutory merits where factual verification of compliance and supporting documents is required; that claim was remanded for fresh decision in accordance with law.

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Issues: (i) Whether an undertaking approved under the STPI scheme, but not by the Board appointed under section 14 of the Industries (Development and Regulation) Act, 1951, is entitled to deduction under section 10B of the Income-tax Act, 1961. (ii) Whether the assessee's alternate claim for deduction under section 10A of the Income-tax Act, 1961 could be examined and allowed in accordance with law.

Issue (i): Whether an undertaking approved under the STPI scheme, but not by the Board appointed under section 14 of the Industries (Development and Regulation) Act, 1951, is entitled to deduction under section 10B of the Income-tax Act, 1961.

Analysis: Deduction under section 10B was held to depend on the statutory requirement that the unit be a 100% export oriented undertaking approved by the prescribed authority. Approval by the STPI authority was not treated as equivalent to the approval contemplated by the provision. The reasoning followed the binding view that the conditions for STPI registration and those for section 10B approval are distinct.

Conclusion: The assessee was not entitled to deduction under section 10B.

Issue (ii): Whether the assessee's alternate claim for deduction under section 10A of the Income-tax Act, 1961 could be examined and allowed in accordance with law.

Analysis: The alternate claim was raised before the Assessing Officer and again before the appellate authority. The Tribunal noted that the claim required factual verification of the statutory conditions, including the prescribed report and other supporting material. Following the earlier view that such a claim should be considered on merits where the principal claim fails, the matter was sent back for examination.

Conclusion: The alternate claim under section 10A was remanded to the Assessing Officer for verification and decision in accordance with law.

Final Conclusion: The denial of deduction under section 10B was upheld, while the alternate claim under section 10A was restored for fresh adjudication, resulting in only partial relief to the assessee.

Ratio Decidendi: Approval required by a deduction provision must satisfy the specific statutory authority and conditions prescribed by that provision, and an alternate claim depending on factual compliance may be examined on remand when raised during the appellate process.

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