Section 10AA deduction adjustment under section 143(1) cannot survive once scrutiny assessment under section 143(3) accepts the claim.

A claim for deduction under section 10AA that was adjusted in an intimation under section 143(1) could not be sustained once the same claim was examined in a regular scrutiny assessment under section 143(3) and no disallowance was made. The Tribunal treated the later assessment as ative of the issue because the deduction claim had been considered on merits in scrutiny, leaving the earlier prima facie adjustment without effect. The first appellate relief was therefore maintained, and the prior disallowance was held not to survive.

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Issues: Whether the disallowance of deduction under section 10AA made in the intimation under section 143(1) survived after the regular assessment under section 143(3) examined the same claim and did not make any disallowance.

Analysis: The Tribunal noted that the case was selected for scrutiny inter alia on the deduction claim, and the assessment under section 143(3) was completed after examination of the issue. In that assessment, no disallowance was made under section 10AA. On these facts, the earlier adjustment made in the intimation under section 143(1) was treated as having been rendered ineffective by the subsequent scrutiny assessment.

Conclusion: The prior disallowance under section 143(1) did not survive, and the relief granted by the first appellate authority was upheld.

Ratio Decidendi: Where a claim is examined in regular assessment under section 143(3) and no disallowance is made, an earlier adjustment made in the intimation under section 143(1) on the same issue cannot be sustained.

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