Actual commencement of production governs deduction eligibility where contemporaneous evidence outweighs an erroneous accountant certificate.

Eligibility for deduction under section 10B turned on the actual year in which the unit commenced manufacture or production. Contemporaneous records showed that machinery and electrical fittings were not available in the earlier year, the balance sheet reflected only a shed, there was no business activity or profit and loss in that year, and registration and utility records supported commencement only in the later year. The accountant's earlier date entry was treated as inadvertent and inconsistent with the surrounding evidence. On that factual basis, the beneficial export-oriented deduction was allowed and the objection based solely on the certificate was rejected.

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Issues: Whether the assessee was entitled to deduction under section 10B of the Income-tax Act, 1961 for the assessment year in question on the basis that the unit had commenced manufacture or production in the relevant earlier year, and whether the Revenue could rely only on the accountant's certificate to deny the claim.

Analysis: The relevant question was the actual year of commencement of manufacture or production. The accountant's certificate mentioned an earlier date, but the assessee produced contemporaneous material showing that no machinery or electric fittings were available in the earlier year, the balance sheet reflected only a shed, there was no business activity or profit and loss in that year, the sales tax registration showed operation from a later date, and electricity and location records supported commencement only in the subsequent year. A public document issued by a government authority was treated as reliable evidence, and the accountant's date entry was found to be inadvertent and inconsistent with the surrounding records. In these circumstances, the beneficial provision was applied on the basis of the actual factual commencement of production.

Conclusion: The assessee was held entitled to deduction under section 10B, and the Revenue's objection based on the accountant's certificate was rejected.

Final Conclusion: The disallowance was deleted because the unit was found to have commenced manufacture or production in the later year, making the claim under section 10B admissible.

Ratio Decidendi: For a deduction linked to commencement of manufacture or production, the determining factor is the actual commencement established by contemporaneous evidence, not an isolated erroneous certificate entry, and a beneficial export-oriented deduction must be allowed where the factual record supports eligibility.

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