Section 10A – Unless the initial years claim is withdrawn, subsequent years claim cannot be denied.

Deduction u/s. 10A was first made by the assessee in assessment year 2005-06, which was allowed by the order dated 10.12.2008 passed u/s. 143(3) of the Act. For the assessment years 2006-07 and 2007-08, the Assessing Officer (AO) denied claim for deduction u/s. 10A. Aggrieved, the assessee preferred an appeal to CIT(A) who allowed the claim of the assessee on merits. Aggrieved, the revenue preferred an appeal to the Tribunal where on behalf of the assessee it was argued that while the CIT(A) has allowed the appeal on merits, the Revenue could not withdraw the claim of deduction since unless the initial years claim is withdrawn, subsequent years claim cannot be denied.

HELD

The Hon’ble High Court of Bombay has considered such issue in the case of CIT vs. Paul Brothers 216 ITR 548 wherein the Hon’ble High Court has held that “unless deductions allowed for the assessment year 1980-81 on the same grounds were withdrawn, they could not be denied for the subsequent years”. This decision of the Hon’ble High Court of Bombay was followed by the Hon’ble high Court in the case of CIT vs. Western Outdoor Interactive Pvt. Ltd. 349 ITR 309 wherein the Hon’ble High Court has held that “where a benefit of deduction is available for a particular number of years on satisfaction of certain conditions under the provisions of the Income-tax Act, 1961, then unless relief granted for the first assessment year in which the claim was made and accepted is withdrawn or set aside, the Incometax Officer cannot withdraw the relief for subsequent years. More particularly so, when the Revenue has not even suggested that there was any change in the facts warranting a different view for subsequent years.”

Following the ratio laid down by the High Court, the Tribunal declined to interfere with the order of CIT(A). The appeals filed by the Revenue were dismissed.