STP unit deduction eligibility upheld despite approval mechanism and wrong-section claim being treated as technical errors.

An STP unit treated as a 100% export oriented unit engaged in call centre operations was held eligible for deduction under sections 10A and 10B despite the absence of separate Board of Approval ratification, because approval through the designated STP mechanism and the Inter-Ministerial Standing Committee was sufficient where the substantive conditions were met. The claim was also not defeated by being made under the wrong section in the return, since that was only a technical error and the underlying eligibility was undisputed. The commentary states that deduction should not be denied to an otherwise eligible unit on such procedural grounds.

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Issues: Whether the assessee, being a Software Technology Park unit registered as a 100% export oriented unit and engaged in call centre operations, was entitled to deduction under section 10A or section 10B of the Income-tax Act, 1961, notwithstanding the objection that approval from the Board of Approval / ratification was not separately obtained and notwithstanding that the claim was made under the wrong section in the return.

Analysis: The unit was registered under the STP scheme and was granted approval by the designated officer and the Inter-Ministerial Standing Committee. The record also showed that the unit was treated as a 100% export oriented unit for IT enabled services, which included call centre activity. The CBDT instruction clarified that deduction under section 10A was not to be denied to STP units merely because the approval had been granted by the Director of STPs, provided the other conditions were satisfied. The Court also treated the assessee's claim under the wrong section as a technical mistake that could not defeat an otherwise admissible deduction, particularly where the audit documentation and computation mechanism for sections 10A and 10B were substantially similar and there was no dispute about the underlying eligibility.

Conclusion: The assessee was entitled to deduction under sections 10A and 10B of the Income-tax Act, 1961, and the disallowance was rightly deleted.

Ratio Decidendi: A deduction cannot be denied to an otherwise eligible STP 100% export oriented unit merely because approval was granted through the designated STP mechanism or because the claim was made under the wrong but substantively corresponding exemption provision.

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