Supreme Court Upholds HC Direction to Notify State Pollution Control Boards for Income Tax Exemption

The Telangana State Pollution Control Board and Andhra Pradesh Pollution Control Board, both statutory bodies constituted under central environmental laws, approached the Telangana High Court seeking notification under Section 10(46) of the Income-tax Act. The tax authorities rejected applications seeking withdrawal of the earlier approval and notification on the ground that approval under Section 10(23C)(iv) was perpetual and could not be surrendered.

The High Court rejected this stand and directed withdrawal of the earlier approval and consideration of the Boards’ applications under Section 10(46). The CBDT carried the matter to the Supreme Court.

Issue Before SC: Whether a statutory body already approved under Section 10(23C)(iv) is barred from surrendering that approval and seeking notification under Section 10(46) of the Income-tax Act.

SC’s Decision: The Supreme Court declined to interfere with the Telangana High Court’s judgment and dismissed the Special Leave Petitions. The High Court had correctly held that there is no statutory bar preventing an assessee from surrendering an approval granted under Section 10(23C)(iv) and opting for a more beneficial exemption under Section 10(46).

It was affirmed that the power to withdraw approval is not confined to suo motu action by the authority and can be exercised at the request of the assessee. The Court also accepted that Section 10(46) grants certainty of exemption through government notification, unlike Section 10(23C)(iv), which merely enables a claim subject to assessment.

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