INCOME TAX ACT, 1961

Section 10B(8)

Deduction under section 10B(8) - Allowability of - AO denied exemption on the ground that assessee did not furnish declaration in writing before due date of filing of original return of income -

Assessee was a 100% export-oriented unit engaged in the business of running a call centre and IT-Enabled and Remote Processing Services. Assessee filed its return of income on 31-10-2001 for assessment year 2001-02, declaring loss of Rs. 15,47,76,990 and claimed exemption under section 10B. Along with original return of income filed on 31-10-2001, assessee annexed a note to the Computation of Income in which assessee clearly stated that company was a 100% export-oriented unit and entitled to claim exemption under section 10B and, therefore, no loss was being carried forward. Thereafter, assessee filed a declaration, dated 24-10-2002 before AO stating that assessee did not want to avail benefit under section 10B for assessment year 2001-02 as per section 10B(8). Assessee filed the revised return of income on 23-12-2002 wherein exemption under section 10B was not claimed and the assessee claimed carry forward of losses. AO passed an order dated 31-3-2004 rejecting withdrawal of exemption under section 10B holding that assessee did not furnish declaration in writing before due date of filing of original return of income, which was 31-10-2001. Thereby, AO made addition in respect of denial of claim of carry forward of losses under section 72. Held: The wording of section 10B(8) is very clear and unambiguous which makes clear that for claiming benefit under section 10B(8), the twin conditions of furnishing of the declaration in writing to AO and that the same must be furnished before due date of filing return of income under sub-section (1) of section 139 are required to be fulfilled and/or satisfied. Both the conditions to be satisfied are mandatory. It cannot be said that one of the conditions would be mandatory and the other would be directory, where words used for furnishing declaration to AO and to be furnished before the due date of filing of the original return of income under sub-section (1) of section 139 are same/similar. Accordingly, assessee was not entitled to the benefit under section 10B(8) on non-compliance of the twin conditions as provided under section 10B(8).

Distinguished:G.M. Knitting Industries (P) Ltd. & AKS Alloys (P) Ltd. (2016) 12 SCC 272 : 2015 TaxPub(DT) 3423 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2011-02

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