Revision u/s 263 and denial of deduction u/s 80IA: A Critical Analysis of the Delhi High Court's Judgment

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....s article seeks to provide an in-depth analysis of this landmark decision. Background: In the Assessment Year (AY) 2010-11, the respondent/assessee, a telecom company specializing in providing telecommunication and related support services, faced scrutiny of its income tax return. The company had initially declared its total income as nil, citing deductions under Section 80IA of the Act and book profit of a specific amount. However, the revenue selected the return for scrutiny and served a notice under Section 143(2) of the Act. This marked the beginning of a complex tax assessment process. Key Issues: * Scope of Section 263 of the Act: The primary issue at hand was the interpretation of Section 263 of the Income Tax Act. The revenu....

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....or committed by the Assessing Officer. They emphasized that the order should be considered erroneous only when it is not sustainable in law. Mere differences in opinion between the two authorities should not be a sufficient basis for invoking Section 263. Eligibility for Deduction under Section 80IA: The revenue argued that the respondent/assessee was not entitled to deductions under Section 80IA(4)(ii) of the Act due to the migration of licenses from IP-VPN to NLD-ILD. They believed that this change constituted the creation of a new undertaking, affecting the eligibility criteria. In response, the respondent/assessee pointed out that the migration of licenses did not result in the creation of a new undertaking within the meaning of Sect....