JUDGMENT :

Adarsh Kumar Goel, J.

Civil Appeal No. 20854 of 2017 (@ Special Leave Petition (Civil) No. 4565 of 2015)

1. Leave granted. This appeal has been preferred against the judgment and order dated 28th July, 2014 of the High Court of Karnataka at Bangalore in Income Tax Appeal No.477 of 2013. The High Court framed the following question of law for consideration :

“When once the eligible business of an assessee is given the benefit of deduction under Section 80IB on the assessee satisfying the conditions mentioned in sub-sec. (2) of Section 80IB, can the assessee be denied the benefit of the said deduction on the ground that during the said 10 consecutive years, it ceases to be a small scale industry?”

2. The High Court answered the question in the negative and in favour of the assessee. The revenue has questioned the said view.

3. The respondent assessee is engaged in manufacture and sale of components/parts of CNC lathes and similar machines. Its income was assessed for the assessment year 2005-2006 at Rs.1,79,82,653/-. However, the Commissioner of Income Tax, interfered with the assessment under Section 263 to the extent it allowed deduction under Section 80IB(3) of the Income Tax