37 Sections 10A, 10B, 254 and 263 – Appellate Tribunal Power to direct consideration of alternative claim – A. Y. 2010-11 – Revision – Commissioner directing withdrawal of exemption u/s. 10B – Appeal against order of Commissioner refusing to consider claim u/s. 10A – Tribunal has power to direct consideration of alternative claim of assessee to exemption u/s. 10A

CIT vs. Flytxt Technology P. Ltd.; 398
ITR 717 (Ker):

For the A. Y. 2010-11, the Assessing Officer
had allowed the assessee’s claim for exemption u/s. 10B of the Income-tax Act,
1961 (Hereinafter for the sake of brevity referred to as the “Act”).
The Commissioner invoked his jurisdiction u/s. 263 of the Act and held that the
assessee was not entitled to exemption u/s. 10B of the Act and directed the
Assessing Officer to withdraw the exemption granted u/s. 10B. The assessee
raised an alternative claim for exemption u/s. 10A of the Act. The commissioner
refused to consider the assessee’s claim. The Tribunal directed the Assessing
Officer to decide the issue afresh including the claim of the assessee for the
benefit of section 10A. 

On appeal by the Revenue, the Kerala High
Court upheld the decision of the Tribunal and held as under:

“i)  Section 254 of the Act
obliged the Tribunal to consider the appeal and pass such orders thereon as it
thinks fit. Even if the power conferred on the Commissioner u/s. 263 only
authorised him to examine whether the order passed by the Assessing Officer was
erroneous and prejudicial to the interest of the Revenue, that restriction of
the power could not affect the powers of the Tribunal which was bound to
exercise u/s. 254 of the Act.

ii)  Therefore, there was no
illegality in the order passed by the Tribunal.”