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2022 (2) TMI 523 - AT - Income TaxRevision u/s 263 - Disallowance of claim u/s 10B - reasoning given by Ld. Principal CIT was that the A.O. should have set off the brought forward losses before allowing deduction u/s 10B - HELD THAT:- We notice that the Ld. Principal CIT did not follow the binding decision of the jurisdictional High Court by observing that the issue is still not reached finality as the matter is pending before Hon’ble Supreme Court. It is a well settled proposition of law that all the authorities below the jurisdictional High Court have to necessarily follow the decision rendered by the Hon’ble High Court. Accordingly, the Ld. Principal CIT was not justified in refusing to follow the decision rendered by the jurisdictional High Court. In any case, the decision rendered by Hon’ble Karnataka High Court in the case of Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] has since been upheld by Hon’ble Supreme Court in the case of CIT Vs. M/s. Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] Hence, the deduction u/s 10B should be allowed without setting off of brought forward losses for the year under consideration. Accordingly, this reasoning od Ld. Principal CIT would fail. R&D activity carried out by the assessee in biotechnology services would not qualify as ‘computer software’ within the meaning given in sec. 10B - We find merit in the said contentions of the Ld. A.R. The Hon’ble Bombay High Court in the case of CIT vs. Western Outdoor Interactive Pvt. Ltd. [2012 (8) TMI 709 - BOMBAY HIGH COURT] has held that whether a benefit of deduction is available for a particular number of years on satisfaction of certain conditions and under the provision of Act, then without withdrawing or setting aside the relief granted for the first assessment year in which claim was made and accepted, the AO cannot withdraw the relief for subsequent assessment years. This ratio was laid down in the context of section 10A and the same, in our view, can be applied to sec.10B also. Accordingly, once there is no change in the facts and circumstances of the case from the earlier years from the initial year when the claim has been accepted, then the deduction cannot be disallowed or denied in the subsequent years of claim. The deduction so allowed in assessment year 2005-06 has not been withdrawn. In that case, the PCIT was not justified in directing the AO to deny deduction in the intervening year. Hence, the second reasoning given by Ld. Principal CIT also would fail. - Decided in favour of assessee.
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