The Madras High Court held that the assessee entitled to rely upon approval of Development Commissioner, claim a deduction for earning of foreign exchange.
The appellant, Indus Teqsite Private Ltd. submitted that where a deduction was considered and allowed, the subsequent withdrawal of the same under Section 148 of the Act amounted to a change of opinion. The appellant-assessee pointed out that they had been granted approval by the Authority as early as 17.4.2008 and based on such approval, deductions were claimed by the assessee under Section 10B of the Act, which was accepted by the Assessing Officer. All of a sudden, for the assessment year 2006-07, after the assessment was completed under Section 143(3) of the Act, the same was sought to be reopened by invoking the power under Section 147 of the Act.
The issue raised was whether the reopening was on account of change of opinion because the appellant-assessee had relied upon the approval granted by the Development Commissioner as early as 17.4.2008 and the assessment had been completed in respect of other years as well as the subject assessment, which was sought to be reopened.
The division bench of Justice T.S. Sivagnanam and Justice Sathi Kumar Sukumara Kurup held that the non-obtaining of ratification certificate from the Board has not been attributed to the assessee as a default committed by the assessee. There may be various reasons, for which, the Board might not have granted ratification. Nevertheless, the approval granted by the Authority, to whom the power had been delegated was valid and hence, as long as the said approval was not withdrawn, the assessee would be entitled to rely upon the approval and claim deduction under Section 10B of the Act, which is a special provision for earning of foreign exchange. In such circumstances, the reopening of assessment is without jurisdiction and bad in law.
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