Section 10B deduction upheld where Development Commissioner approval and later ratification were treated as effective from the original permission date.

Section 10B deduction for a 100% export oriented undertaking was supported where approval had been granted by the Development Commissioner under the clarified CBDT approval mechanism. Subsequent ratification by the Board of Approval was treated as relating back to the original permission date, so internal delay in ratification did not defeat the claim when substantive eligibility conditions were met. On that basis, the denial of deduction was set aside and the assessee was found eligible. The challenge to reopening was not examined because the substantive tax issue was ative.

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Issues: Whether the assessee was entitled to deduction under Section 10B of the Income-tax Act, 1961 on the strength of approval granted by the Development Commissioner and subsequent ratification, and whether the denial of such deduction could be sustained.

Analysis: The approval mechanism for 100% export oriented undertakings had been clarified by CBDT instructions, recognising delegation of approval powers to the Development Commissioner. The assessee had obtained permission through the competent authority, and the subsequent ratification by the Board of Approval was held to relate back to the date of the original permission. The delay in internal ratification could not defeat the assessee's claim where the substantive conditions for deduction were otherwise satisfied. In view of this conclusion, the challenge to reopening was not required to be examined.

Conclusion: The assessee was held eligible for deduction under Section 10B, and the denial of the claim was set aside. The assessee succeeded on the substantive tax issue.

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