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JUDGMENT R. Sudhakar, J. - This Tax Case (Appeal) filed by the Revenue as against the order of the Income Tax Appellate Tribunal for the assessment year 2005-06 was admitted by this Court on the following substantial question of law: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the registration with STPI is not a pre-requisite for grant of deduction under Section 10B of the Income Tax Act?" 2. The brief facts are as follows: The respondent/assessee is a company engaged in software development. The assessee company was incorporated on 19.12.2003 and started business operations from January, 2004. The assessee prepared accounts for the period 19.12.2003 to 31.3.2005. For the first time, for the assessment year 2005-06, the assessee claimed deduction under Section 10B of the Income Tax Act and filed return of income declaring total income of Rs.38,430/- on 19.10.2005. The said return was processed under Section 143(1) of the Income Tax Act on 18.3.2006 and subsequently, the case was taken up for scrutiny. The Assessing Officer, while dealing with the claim of deduction under Section 10B of the Income Tax Act, found that the assessee had applied for registration as 100% EOU to Software Technology Parks of India (STPI) on 24.3.2005 and obtained approval only in May, 2005; hence, as per Circular No.1 of 2005 dated 06.01.2005 of the CBDT, the assessee was not eligible for the benefit under Section 10B of the Act. Accordingly, the Assessing Officer disallowed the entire claim of deduction under Section 10B of the Income Tax Act on the ground that the assessee had obtained approval from STPI only in May, 2005, which was after the end of the previous year relevant to the assessment year 2005-06. 3. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), who partly allowed the appeal holding as follows: "It is settled proposition of law that an exemption has to be granted as and from the assessment year in which the conditions prescribed in the section have been satisfied until the end of the holiday period. (C.I.T. v. Gopal plastics Ltd., 215…

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