Section 10A deduction cannot be denied later when prior scrutiny accepted eligibility and supporting report was filed

An assessee's alternate claim for deduction under section 10A was allowed despite the original return claiming section 10B, because the requisite Form 56F was furnished during assessment and STPI registration was on record. Earlier scrutiny assessments had already accepted the same eligibility on identical facts, and no material showed that those allowances were or revised. On that basis, the Revenue could not take a contrary view in a later year merely because the original return used a different exemption claim. The commentary emphasises that assessment proceedings aim to determine the correct tax liability in accordance with law.

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Issues: Whether the assessee was entitled to deduction under section 10A of the Income-tax Act, 1961 despite having originally claimed deduction under section 10B and despite the absence of the corresponding report in the return.

Analysis: The assessee's claim under section 10A had been accepted in earlier scrutiny assessments for the immediately preceding assessment years, and no material was shown to establish that the allowance for those years was erroneous or subsequently revised. The appellate record also showed that the relevant audit report in Form 56F was furnished during the assessment proceedings and that the assessee possessed the requisite STPI registration. In these circumstances, the Revenue could not take a contrary stand in the later year when the same eligibility had already been examined and allowed on scrutiny. The first appellate authority therefore accepted the alternate claim on the basis of the facts on record and the principle that assessment proceedings are intended to determine the correct tax liability in accordance with law.

Conclusion: The alternate claim under section 10A was rightly allowed and the Revenue's challenge failed.

Ratio Decidendi: Where an assessee's eligibility for a deduction has been accepted in earlier scrutiny assessments on the same facts and the requisite supporting report is available during assessment proceedings, the Revenue cannot deny the deduction in a subsequent year merely because the original return claimed a different exemption.

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