AO cannot withdraw Section 10B relief allowed in earlier year in subsequent assessment year

Gangagen Biotechnologies Pvt. Ltd. Vs PCIT (ITAT Bangalore)

Bombay High Court in the case of CIT vs. Western Outdoor Interactive Pvt. Ltd. (349 ITR 309) has held that whether a benefit of deduction is available for a particular number of years on satisfaction of certain conditions and under the provision of Act, then without withdrawing or setting aside the relief granted for the first assessment year in which claim was made and accepted, the AO cannot withdraw the relief for subsequent assessment years. This ratio was laid down in the context of section 10A and the same, in our view, can be applied to sec.10B also. Accordingly, once there is no change in the facts and circumstances of the case from the earlier years from the initial year when the claim has been accepted, then the deduction cannot be disallowed or denied in the subsequent years of claim. In the instant case, the eligibility of the assessee to claim deduction u/s 10B of the Act would have been examined in the first year, i.e., in AY 2005-06 and the deduction was allowed. The deduction so allowed in assessment year 2005-06 has not been withdrawn. In that case, the PCIT was not justified in directing the AO to deny deduction in the intervening year.

FULL TEXT OF THE ORDER OF ITAT BANGALORE

Both the appeals have been filed by the assessee and both relate to the assessment year 2011-12. The appeal numbered as 941/Bang/2016 relates to appeal filed by the assessee challenging the revision order passed u/s 263 of the Income-tax Act,1961 [‘the Act’ for short]. Other appeal relates to the order passed by Ld. CIT(A) against the assessment order passed u/s 143(3) r.w.s. 263 of the Act.

Please become a Premium member. If you are already a Premium member, login here to access the full content.