Alifcloud IT Consulting Pvt Ltd Vs ITO (ITAT Pune)
The Income Tax Appellate Tribunal (ITAT), Pune, allowed the appeal of the assessee and held that an eligible startup is entitled to claim deduction under Section 80-IAC of the Income Tax Act from the first assessment year in which it becomes eligible, and there is no requirement to complete three consecutive years before claiming the deduction. The assessee, a private limited company incorporated on 2 August 2020, was engaged in providing innovative IT solutions and was recognized as an eligible startup by the Department for Promotion of Industry and Internal Trade (DPIIT) on 23 October 2023. For Assessment Year 2024-25, it claimed a deduction of ₹1,50,59,484 under Section 80-IAC, which was disallowed by the Central Processing Centre (CPC) while processing the return under Section 143(1). The Additional/Joint Commissioner (Appeals) upheld the disallowance on the ground that the deduction could be claimed only after completion of three consecutive years.
The Tribunal observed that the assessee satisfied the prescribed conditions, including incorporation after 1 April 2016, filing the return and audit report within the due date, turnover below ₹100 crore, and obtaining DPIIT recognition during Financial Year 2023-24 relevant to Assessment Year 2024-25. It found that Section 80-IAC does not contain any condition requiring an eligible startup to complete three consecutive years before becoming entitled to the deduction. Holding that the appellate authority had misinterpreted the provision, the Tribunal set aside its order and directed the Assessing Officer/CPC to allow the deduction claimed under Section 80-IAC. Accordingly, the assessee’s appeal was allowed.
