CIT vs. Micro Instruments Company (P&H High Court)

S. 80-IB: Fact that the AO allowed s. 80-IB deduction in the year of setting up does not disentitle him from examining the eligibility in subsequent years. As per the CBDT’s low tax effect circular, the tax effect has to be seen each year irrespective of the fact that a common issue arises over several years

An assessee must fulfill each of the conditions stipulated in Section 80-IB in each of the years in which the deduction thereunder is sought. The Assessing Officer would be entitled to ascertain in each of the assessment years whether or not the conditions of Section 80-IB remained fulfilled. In other words, even where an assessee is found to have fulfilled all the conditions of Section 80-IB in the initial assessment year and has on account thereof been granted the deduction thereunder, an Assessing Officer assessing the assessee’s income in subsequent years would be entitled to ascertain whether in that assessment year the conditions in Section 80-IB remained fulfilled or not. If not, he is bound to deny the deduction

CIT vs. Micro Instruments Company (P&H High Court)

 

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