Export-oriented unit deductions allowed despite approval objection and omission to claim in the return of income.

Deduction under section 10B was available where the assessee had obtained the relevant governmental and STPI approvals, including recognition as a hundred per cent export oriented unit, and the CBDT clarification accepted Development Commissioner approval as valid for the section. The deduction could not be denied merely because the approval was not by the concerned statutory board. Deduction under section 10A was also available despite the omission to claim it in the return of income, as the appellate forum could consider the entitlement on the facts and the tax benefit was not defeated by the omission. The Tribunal's grant of relief under both provisions was upheld.

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Issues: (i) Whether the assessee was entitled to deduction under section 10B of the Income-tax Act, 1961 as a hundred per cent export oriented undertaking despite the objection that the approval was not by the concerned statutory board; (ii) Whether the assessee was entitled to deduction under section 10A of the Income-tax Act, 1961 even though the claim had not been made in the return of income.

Issue (i): Whether the assessee was entitled to deduction under section 10B of the Income-tax Act, 1961 as a hundred per cent export oriented undertaking despite the objection that the approval was not by the concerned statutory board.

Analysis: The materials on record showed that the assessee had obtained the relevant governmental and STPI approvals, including the resolution recognising hundred per cent export oriented unit status and the green card issued by the designated authority. The clarification issued by the CBDT was also noticed, indicating that approval granted by the Development Commissioner would be valid for the purpose of section 10B. On that factual and legal footing, the Tribunal affirmed the relief granted by the appellate authority.

Conclusion: The assessee was entitled to deduction under section 10B, and the objection based on absence of approval by the concerned statutory board was rejected.

Issue (ii): Whether the assessee was entitled to deduction under section 10A of the Income-tax Act, 1961 even though the claim had not been made in the return of income.

Analysis: The Tribunal treated sections 10A and 10B as materially similar for the purpose of the claim and applied the principle that tax liability must be determined on the basis of the provisions applicable to the facts, not defeated by an assessee's omission in the return. The wide appellate powers under section 246A were recognised as sufficient to consider the entitlement to deduction, and the department could not take advantage of the assessee's mistake in not claiming the benefit earlier.

Conclusion: The assessee was entitled to deduction under section 10A notwithstanding the omission to claim it in the return of income.

Final Conclusion: The Tribunal's order granting the assessee relief under sections 10B and 10A was upheld, and the revenue's challenge failed in entirety.

Ratio Decidendi: Where the factual approvals establish export-oriented status and the governing authority has recognised the approval mechanism as valid, deduction cannot be denied on a narrow approval objection; similarly, a legitimate tax deduction may be considered in appeal even if not specifically claimed in the return, so long as the appellate forum is otherwise competent to grant it.

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