Law: Income Tax Act, 1961

Section: 10B

Section 10B of the Income-tax Act, 1961 - Export oriented undertaking (Grant of approval) - Assessment year 2007-08 - Whether where Development Commissioner of SEZ granted approval of 100 per cent EOU in favour of assessee company, which came to be subsequently ratified by Board of Approval, as such that ratification would be from date on which Development Commissioner itself granted such approval, entitling assessee to claim for deduction under section 10B - Held, yes [Para 5] [In favour of assessee] Circulars and Notifications : Instruction No. 02/2009, dated 9-3-2009 FACTS â–  The assessee filed return of income and claimed deduction under section 10B. The assessee was asked to furnish whether the approval was accorded by Board of Approval (BOA) as stipulated in clause (iv) of Explanation 2 of section 10B. â–  The Assessing Officer, showing his non-satisfaction with the approval granted by the Development Commissioner SEZ and also with the necessary details as submitted by assessee, disallowed the claim of deduction in terms of interpretation of CBDT's/instruction dated 9-3-2009 on the ground that if the approval granted by the Development Commissioners was ratified by BOA, only then, the assessee would be entitled to deduction under section 10B and Board's instructions are clarificatory and same is retrospective. â–  On appeal, the Commissioner (Appeals) deleted such disallowance holding that there was not only the approval given by the Development Commissioner but the same was also subsequently ratified by BOA. â–  On further appeal, the Tribunal confirmed the order passed by the Commissioner (Appeals) and deleted the above disallowance. â–  On appeal to High Court: HELD â–  In the present case, given the facts and circumstances that the assessee claimed the deduction under section 10B claiming 100 per cent EOU, there was already a permission/approval granted by the Development Commissioner declaring/approving the assessee as 100 per cent EOU. However, on considering the word approved by the Board of Approval as mentioned in section 10B at the relevant time there was no ratification of the decision of the Development…

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