STRAPPING SOLUTIONS P.LTD,MUMBAI vs. ITO 9(3)(2), MUMBAI

We have considered the rival contentions. So far as the error in writing the correction section while making the claim in the return of income is concerned, the assessee during the assessment proceedings itself had made the submissions before the AO that there was an inadvertent error in making the claim under section 10A instead of under section 80IB. The assessee submitted to the AO that this claim be considered under section 80IB. He also filed a revised return in this respect. However, the AO rejected the claim of the assessee. It has been time and again held that the taxing authorities should tax the real income of the assessee and if a claim is allowable to an assessee under the relevant provisions they should themselves consider the same and give appropriate relief. They are not supposed to penalise the assessee for their inadvertent errors. A duty is also cast upon the AO not only to disallow the claim which as per the provisions of law is not tenable but also to allow the claim to which the assessee is entitled as per provisions of the law and which has been brought to the knowledge of the AO during the assessment proceedings. Even a duty has been also cast upon the first appellate authority i.e. CIT(A) whose powers are coterminous with that of the AO to consider the claim put forward by the assessee and decide the same as per provisions of law. The case laws relied upon by the assessee are squarely applicable on the facts and circumstances of the case of the assessee.

So far as the employment of 10 or more than 10 persons during the year is concerned, the assessee has explained that more than 10 persons had been employed in the manufacturing activity. As per the case laws cited by the assessee, it is not necessary that the assessee must employee 10 or more than 10 employees during the entire financial year. If the assessee employs 10 or more than 10 employees for substantial part of working period of factory carrying on manufacturing process then, in that event it shall be presumed that the assessee has complied with the provisions of section 80IB(2)(iv). The above stated case laws are squarely applicable to the case of the assessee.

In view of the above, we find merit in the appeal of the assessee and the same is hereby allowed. The AO is directed to allow the deduction to the assessee for the assessment years under appeal under section 80IB.