Principal Commissioner of Income Tax-III, Bangalore v Wipro Limited

Holding

An assessee who has claimed an exemption under section 10B of the Income-tax Act, 1961 cannot withdraw the exemption claim and instead carry forward losses by filing a revised return after the prescribed time limit under the proviso to section 10B(8); the conditions of section 10B(8) are mandatory, not directory.

Facts

Wipro had filed its original return for AY 2001-02 claiming exemption under section 10B for its 100 per cent export-oriented unit. It later sought, through a revised return, to opt out of the section 10B exemption and instead carry forward business losses. The Revenue rejected the revised claim as out of time.

Reasoning

The Supreme Court reversed the Karnataka High Court and held that both the requirement to file a declaration before the due date for furnishing the return under section 139(1) and the requirement of the declaration itself are mandatory. The Court applied the strict-construction rule for exemption and incentive provisions and found that the proviso's twin conditions could not be diluted.