These appeals by assessee are directed against order dt. 9th Aug., 2004 (for asst. yr. 2001-02) of CIT(A)-IV, Hyderabad and orders dt. 30th March, 2007 (for asst. yrs. 2002-03 and 2004-05) and order dt. 29th Sept., 2006 (for asst. yr. 2003-04) of CIT(A)-III, Hyderabad. grounds raised in these appeals are based on identical set of facts and therefore, for sake of convenience all appeals are taken up together and disposed of by this common order. For purpose of knowing exact grounds of appeal, grounds of appeal raised in ITA No. 1084/Hyd/2004 for asst. yr. 2001-02 are reproduced below: (1) CIT(A) erred in law and facts of case in allowing exemption under s. 10B when your appellant had submitted that unit is eligible for exemption under s. 10A and also that claim in returns of income was wrong. (2) CIT(A) should have considered notice of not claiming exemption user s. 10A/10B submitted during course of hearing and may not have confirmed exemption under s. 10B. (3) CIT(A) erred in law and facts of case in not allowing carry forward of unabsorbed depreciation and losses in view of exemption under s. 10A/10B. (4) CIT(A) erred in law and facts of case in including earlier assessment years in which no exemption under s. 10B should be withdrawn and carry forward of unabsorbed losses and depreciation should be allowed. assessee company is engaged in manufacture of ophthalmic lenses. assessee was having profit of Rs. 1,78,39,352 for asst. yr. 2001-02 and claimed exemption under s. 10A/10B of IT Act. During assessment proceedings, AO noticed that assessee has also claimed carry forward of unabsorbed depreciation and business (losses) amounting to Rs. 20,91,03,841. From computation of total income, AO noticed that assessee claimed exemption under s. 10A/10B as per tax audit report submitted in Form 56G; it was certified that assessee had claimed exemption under s. 10B of IT Act, 1961. assessee has also filed Form No. 56F along with letter dt. 19th Sept., 2003 requesting to allow exemption under s. 10A of IT Act. assessee also made request before AO for withdrawal of claim under s. 10A. AO rejected assessee s request for withdrawing exemption under s. 10A but he has allowed claim of exemption under s. 10B. relevant finding of AO is as under: "The essential conditions to claim exemption under s. 10B are that: (i) undertaking should be approved 100 per cent export oriented undertaking. (ii) It manufactures or produces any article or thing or computer software. (iii) report of accountant shall be furnished in Form No. 56G. (iv) Should not be formed by splitting up or reconstruction of any existing business. (v) Should not be formed by transfer of machinery or plant previously used for any purpose. (vi) sale proceeds of article or thing exported out of India should be received in or brought into India by assessee in convertible foreign exchange within specified period. Since assessee has satisfied all above conditions, exemption under s. 10B is available to it." After allowing exemption under s. 10B, AO examined issue pertaining to benefit of carry forward of depreciation and business losses. AO was of view that provisions of s. 10B(6) start with non obstante clause. non obstante clause is usually used in provision to indicate that that provision should prevail despite anything over other clause. Thus non obstante clause will exclude operation and applicability of every other provision in Act. As per cls. (i) and (iv) of sub-s. (6) of s. 10B, assessee cannot claim depreciation allowance and benefit of carry forward of depreciation loss for relevant assessment year when assessee is allowed exemption under s. 10B. It was also noticed by AO that exemption under s. 10B is available to assessee for period of 10 consecutive assessment years starting from assessment year relevant to previous year in which it began to produce article or thing. Since assessee has produced ophthalmic lenses in previous year 1992-93 it will have benefit of exemption under s. 10B for 10 consecutive years starting from asst. yr. 1993- 94. According to this relevant assessment year of assessee company starts from asst. yr. 1993-94 and it goes upto 2002-03 as assessee company commenced production on 26th Feb., 1993. assessee has not claimed exemption under s. 10B for earlier year because there was no profit to assessee company. It has claimed exemption under s. 10B for current year as there was profit of Rs. 1,78,39,352. Thus AO allowed exemption claimed under s. 10B and rejected benefit of carry forward of depreciation and business loss amounting to Rs. 20,91,03,841. CIT(A) confirmed order of AO. learned Authorised Representative submitted that assessee filed Form 56F on 19th Sept., 2003 claiming exemption under s. 10A but same w s rejected by AO citing provisions of s. 10A(8), stating that assessee had to furnish to AO, declaration in writing that provisions of this section may not be applicable to assessee and such declaration should be filed before due date for furnishing return of income under s. 139(1). learned Authorised Representative submitted that assessee has filed letter dt. 19th Sept., 2003 requesting AO regarding withdrawal of exemption under s. 10B. learned Authorised Representative further submitted that filing of declaration under s. 10A(8) within time stipulated under ss. 139(1) and 139(2) is not mandatory and it could be filed during assessment proceedings. learned Authorised Representative in support of his contention relied upon decision of Tribunal Ahmedabad Bench in case of ITO vs. Expo Packaging (1995) 51 TTJ (Ahd) 174. learned Authorised Representative further submitted that during course of assessment proceedings, assessee filed letter dt. 19th Sept., 2003 before ITO requesting that it should not be assessed under s. 10A or 10B. Having withdrawn claim, AO should not have considered withdrawal letter in his assessment order. Being beneficiary provision where option is given to assessee whether to avail benefit or not to avail benefit should be left to assessee; at any rate it is not for AO to decide what benefits he will give to assessee when provision is not mandatory. AO rejected claim under s. 10A on ground that exemption is being allowed under s. 10B. AO rejected assessee s contention regarding withdrawal of claim and has made available exemption under s. 10B for reason that all conditions for filing exemption under s. 10B are satisfied. learned Authorised Representative submitted that AO cannot thrust exemption provided under s. 10B on assessee. learned Authorised Representative in support of his contention relied upon decision of Tribunal, Delhi Bench in case of Moser Baer India Ltd. vs. Jt. CIT (2007) 110 TTJ (Del) 807: (2007) 11 SOT 715 (Del) wherein it was held as under: "The requirement for filing declaration as per provisions of s. 10B(7) is merely directory in nature and not mandatory. Thus, if such declaration is filed during assessment proceedings, it would be sufficient compliance with provisions of s. 10B(7). Therefore, it is open to assessee not to claim tax holiday benefit under s. 10B for any one year or more of relevant block of five assessment years by filing declaration under sub-s. (7) if that section before due date of filing return of income for said assessment years. Since assessee had opted out of provisions of s. 10B, by filing declaration under s. 10B(7) during course of assessment proceedings of relevant assessment years, Revenue could not thrust exemption provided under s. 10B upon assessee." learned Authorised Representative also relied upon judgment of apex Court in case of CIT vs. Mahendra Mills (2000) 159 CTR (SC) 381: (2000) 243 ITR 56 (SC). relevant finding of apex Court is reproduced as below: "The language of provisions of ss. 32 and 34 is specific and admits of no ambiguity. Sec. 32 allows depreciation as deduction subject to provisions o f s. 34. Sec. 34 provides that deduction under s. 32 shall be allowed only if prescribed particulars have been furnished. We have seen r. 5AA of IT Rules, 1962 since deleted, provided for particulars required for purpose of deduction under s. 32. Even in absence of r. 5AA, return of income in form prescribed itself requires particulars to be furnished if assessee claims depreciation. These particulars are required to be furnished in great detail. There is circular of Board dt. 31st Aug., 1965, which provides that depreciation could not be allowed where required particulars have not been furnished by assessee and no claim for depreciation has been made in return. ITO in such case is required to compute income without allowing depreciation allowance. circular of Board dt. 11th April, 1955, imposes merely duty on officers of Department to assist taxpayers in every reasonable way, particularly, in matter of claiming and securing relief. officer is required to do no more than to advise assessee. It does not place any mandatory duty on officer to allow depreciation if assessee does not want to claim that. provision for claim of depreciation is certainly for benefit of assessee. If he does not wish to avail that benefit for some reason, benefit cannot be forced upon him. It is for assessee to see if claim of depreciation is to his advantage. Income under head Profits and gains of business or profession is chargeable to income tax under s. 28 and that income under s. 29 is to be computed in accordance with provisions contained in ss. 30 to 43A. argument that since s. 32 provides for depreciation it has to be allowed in computing income of assessee cannot in all circumstances be accepted in view of bar contained in s. 34. If s. 34 is not satisfied and particulars are not furnished by assessee, his claim for depreciation under s. 32 cannot be allowed. Sec. 29 is thus to be read with reference to other provisions of Act. It is not in itself complete code. If revised return is valid return and assessee has withdrawn claim of depreciation it cannot be granted relying on original return when assessment is based on revised return. Allowance of depreciation is calculated on written down value of assets, which written down value would be actual cost of acquisition less aggregate of all deductions actually allowed to assessee for past years. Actually allowed does not mean notionally allowed . If assessee has not claimed deduction of depreciation in any past year it cannot be said that it was notionally allowed to him. thing is allowed when it is claimed. subtle distinction is there when we examine language used in s. 16 and ss. 34 and 37 of IT Act. It is rightly said that privilege cannot be to disadvantage and option cannot become obligation. AO cannot grant depreciation allowance when same is not claimed by assessee." learned Authorised Representative submitted that in light of above decision of Tribunal, Delhi Bench, assessee may be permitted to withdraw claim under s. 10B given by AO. learned Authorised Representative further submitted that assessee commenced production in previous year relevant to asst. yr. 1993-94 and according to provision of s. 10A, claim is allowable upto asst. yr. 2000-01. It is also submission of learned Authorised Representative that in this case no claim has been made till this year i.e. asst. yr. 2000-01 from inception. assessee s first year of production is asst. yr. 1993-94. Therefore, "the 8 years" period begins with asst. yr. 1993-94 and ends with 2000-01. Upto asst. yr. 2000-01, assessee has not got any benefit by virtue of s. 10A or 10B of Act. Even on consideration of amended provisions of s. 10B applicable to period 1st April, 1999 to 31st March, 2001 where period of 8 assessment years has been substituted by 10 assessment years. last eligible assessment year for assessee is 2002-03. But that does not change assessee s case as in earlier years there is no claim allowed under s. 10B to assessee. learned Authorised Representative while explaining note given in assessment order for 1997-98 in para 2 submitted that exemption under s. 10A or 10B can be considered only if there is profit. learned Authorised Representative submitted that first year in which assessee made profit was 2000-01 and in earlier years there was no profit. learned Authorised Representative submitted that even if assessee chose to be assessed under s. 10A or 10B it must have got benefit which section contemplates. learned Authorised Representative submitted that for first four years commencing from asst. yr. 1997-98, assessee had not derived any benefit either under s. 10A or 10B. learned Authorised Representative submitted that for purpose of carry forward and set off of depreciation and losses as that for purpose of carry forward and set off of depreciation and losses as provided in section is allowable unless exemption claimed under s. 10A or 10B has been allowed. learned Authorised Representative submitted that merely on basis of notionality of allowability of claim, benefit of set off of carry forward of losses cannot be denied. learned Authorised Representative in support of his contention relied upon judgment of apex Court in case of Mahendra Mills (supra). learned Authorised Representative submitted that apex Court has clearly stated that deduction "actually allowed" cannot mean deduction "notionally allowed". In fact it is clearly said that privilege cannot be to disadvantage and option cannot become on obligation. learned Authorised Representative referred to judgment in case of Indian Oil Corporation Ltd. vs. S. Rajagopalan, ITO (1973) 92 ITR 241 (Bom) and pointed out that in that case Department s plea that development rebate reserve must be created irrespective of whether there is profit or not was negatived on ground that condition precedent to actual allowance of development rebate namely creation of reserve was not possible in absence of profits. In ss. 10A and 10B allowance is based on profits; since there was no profit in earlier years Department cannot claim that they have given benefit of s. 10A or 10B. learned Departmental Representative submitted that in case under consideration, assessee s claim under s. 10A has been rejected by AO because he has rightly allowed exemption claimed under s. 10B. learned Departmental Representative while arguing in appeal, submitted that assessee s claim was under s. 10A/10B. He submitted that assessee is eligible for exemption under s. 10B and not under s. 10A. learned Departmental Representative submitted that assessee has started production from 26th Feb., 1993 which is undisputed fact and assessee s first year for claiming exemption under s. 10B is asst. yr. 1993-94 which has ended with asst. yr. 2000-01 on completion of eight years. However, this period of 8 years was extended to 10 years by subsequent amendment. learned Departmental Representative further submitted that in asst. yrs. 1993-94, 1994- 95 and 1995-96, assessee did not make claim under s. 10B. He further submitted that assessee has opted for exemption under s. 10B for asst. yrs. 1996-97, 1997-98, 1998-99, 1999-2000 and 2000-01 but same was not allowed. He submitted that in asst. yr. 2001-02, assessee made claim under s. 10B but during assessment proceedings, same has been withdrawn. learned Authorised Representative submitted that once assessee has opted for benefit under s. 10B and once option is exercised, it is irrevocable. learned Departmental Representative submitted that s. 10B(8) itself provides option to assessee. If he does not want to avail exemption under s. 10B, assessee is to file declaration before stipulated period for filing of return under s. 139(1). learned Departmental Representative further submitted that since assessee did not opt and filed declaration before time stipulated for filing return under s. 139(1), AO is fully justified in allowing claim of exemption under s. 10B. He further submitted that once claim under s. 10B is allowed, assessee is not entitled to get benefit of carry forward and set off of unabsorbed depreciation and business loss. We have heard learned representatives of parties, records perused and have also gone through decisions cited. Some undisputed facts of case are that assessee is eligible for exemption under s. 10A/10B for period asst. yrs. 1993-94 to 2002-03, as assessee begins manufacture on 26th Feb., 1993. Originally, this period of exemption, as per provisions of s. 10B for t h e period 1st April, 1993 to 31st March, 1994 was 8 assessment years beginning with assessment years relevant to previous year in which undertaking begins to manufacture. But subsequent amendments applicable to period 1st April, 1999 to 31st March, 2001 in provisions of s. 10B this period of 8 assessment years has expanded to 10 assessment years. It is also stated that assessee was never allowed actual exemption benefit under s. 10A/10B for earlier years except in asst. yr. 2001-02. crux of matter to be examined in case under consideration is two-fold. first one is whether AO can thrust upon assessee, exemption under s. 10B, while second aspect is whether assessee is entitled to claim exemption under s. 10A/10B when same was claimed by filing prescribed form along with return of income but withdrawn at time of assessment proceedings. In this regard relevant provisions under IT Act read as under: "Sec. 10B(8) Notwithstanding anything contained in foregoing provisions of this section, where assessee, before due date for furnishing return of income under sub-s. (1) of s. 139, furnishes to AO declaration in writing that provisions of this section may not be made applicable to him, provisions of this section shall not apply to him for any of relevant assessment years." Sec. 10B(8) provides that where assessee before due date for furnishing return of income under sub-s. (1) of s. 139, furnished to AO declaration in writing that provisions of this section may not be made applicable to him, provisions of this section shall not apply to him for any of relevant assessment years. Now question is whether this requirement of s. 10B(8) is mandatory or procedural. In case under consideration, admittedly, assessee has not filed declaration as required under s. 10B(8) before stipulated period under s. 139(1) but filed it during course of assessment proceedings. On going through scheme of s. 10B it may appear that assessee who is covered by provisions of s. 10B had not given option to avail or not to avail tax concession provided under s. 10B at time of filing of return of income as per provisions of s. 10B(8) cannot be deprived of its claim for lapse only as procedure of utilizing option cannot be treated as mandatory. same is just directory. In case under consideration, assessee has filed letter dt. 19th Sept., 2003 for withdrawing claim under s. 10A/10B during assessment proceedings and before assessment was completed. We find that rejection of this request by AO while framing assessment under s. 143(3) was not justified. Our above finding is fortified by decision of Ahmedabad Bench in case of ITO vs. Expo Packaging (supra). relevant finding is reproduced as below: "At very outset it may be pointed out that s. 10A was inserted in Act through Finance Act, 1981 with view to encourage establishment of export oriented industries in free trade zones. This new section provides for complete tax exemption in respect of profits and gains derived from industrial undertaking set up in any free trade zone for five initial assessment years. assessee firm has established its factory at Kandla Free Trade Zone and is also entitled for benefit of s. 10A as same is situated in free trade zone area as well as it fulfils conditions laid down in sub-s. (2) of s. 10A. However, legislature has also given option to assessee to make declaration in writing to AO before expiry of time allowed under s. 139(1) or under s. 139(2) of Act mentioning his intention not to avail of this tax concession. In case in hand option admittedly has not been utillized by assessee as was required under s. 10A(7) because declaration in writing has not been submitted with return of income but filed during course of assessment proceedings. After going through scheme of s. 10A, it may appear that assessee who is covered under provisions of s. 10A having not given option to avail or not to avail tax concession provided under said s. 10A at time of filing of return of income as per provisions of s. 10A(7) of Act, cannot be deprived of its claim for lapse only as procedure of utilizing option cannot be treated as mandatory. same is just directory. Their Lordships in case of CIT vs. Gujarat Oil & Allied Industries (supra) were seized with provisions of sub-s. (6A) of s. 80J(1) of Act where assessee who claims any benefit under that s. 80J was supposed to file report of auditors along with its return of income. Sub-s. (6A) further provides that deduction under sub-s. (1) of s. 80J shall not be admissible to assessee who did not file auditors report. Their Lordships observed that word shall be read as may and requirement of filing of audit report be not treated as mandatory condition but in case audit report is filed after return was submitted but before assessment was framed then it should be treated as sufficient compliance with condition. This reasoning of their Lordships is fully applicable to facts of case in hand as provisions of s. 10A(7) which provide option to assessee is not so rigorous as provisions of sub-s. (6A) of s. 80J(1). In case in hand assessee has filed declaration in writing on 26th Nov., 1986 before assessment was completed then it shall be taken that he has utilized option provided under s. 10A(7) of Act and approach of ITO to frame assessment order under s. 143(3) r/w s. 10A of Act was not justified." Gujarat High Court in case of S.R. Koshti vs. CIT (2005) 193 CTR (Guj) 518: (2005) 276 ITR 165 (Guj) held that authorities under Act are under obligation to Act in accordance with law. Tax can be collected only as provided under Act. If assessee, under mistake, misconception or on not being properly instructed, is over assessed, authorities under Act are required to assist him and ensure that only legitimate taxes due are collected. Gujarat High Court in unreported decision in case of Vinay Chandull Satia vs. Parekh, CIT (Spl. Civil Appln. No. 622 of 1981) rendered on 20th Aug., 1981 has laid down approach authorities must adopt in such matters in following terms: "The Supreme Court has in numerous decisions, including Ramlal & Ors. v s . Reaw Coalfields Ltd. 1962 SC 361; State of West Bengal vs. Administrators, Howrah Municipality & Ors. and Babulmal Raichand Oswal vs. Laxmibai R. Tarte AIR 1975 SC 1297, that State authorities should not raise technical plea if citizens have lawful right and lawful right is being denied to them merely on technical grounds. State authorities cannot adopt attitude which private litigants might adopt." second aspect of matter is whether or not Revenue can thrust upon assessee exemption provided under s. 10B of Act. We find that same controversy came up before Tribunal Delhi Bench in case of Moser Baer India Ltd. vs. Jt. CIT (supra) wherein it was held that Revenue could not thrust exemption provided under s. 10B upon assessee. relevant finding of Tribunal is reproduced as below: "The requirement for filing declaration as per provisions of s. 10B(7) is merely directory in nature and not mandatory. Thus, if such declaration is filed during assessment proceedings, it would be sufficient compliance with provisions of s. 10B(7). Therefore, it is open to assessee not to claim tax holiday benefit under s. 10B for any one year or more of relevant block of five assessment years by filing declaration under sub-s. (7) of that section before due date of filing return of income for said assessment years. Since assessee had opted out of provisions of s. 10B, by filing declaration under s. 10B(7) during course of assessment proceedings of relevant assessment years, Revenue could not thrust exemption provided under s. 10B upon assessee." In light of our above discussion, we are of considered view that AO ought to have allowed assessee to withdraw claim under s. 10A/10B. We are also of view that AO cannot thrust exemption under s. 10B upon assessee. We, therefore, set aside orders of lower authorities and cancel claim allowed by AO under s. 10B by allowing assessee s request to withdraw claim under s. 10A or 10B. As regards issue pertaining to carry forward or set off of depreciation and losses, we notice from sub-s. (6) of s. 10A/10B that in cases where exemption under s. 10A/10B is allowed, assessee is not entitled for carry forward or set off of deprecation and losses. Since we set aside order of AO for asst. yr. 2001-02 wherein exemption under s. 10B has been allowed, and allowed request of assessee for withdrawing claim under s. 10A/10B, sub-s. (6) of s. 10A/10B is not applicable and assessee is entitled to carry forward and set off of depreciation/losses in accordance with law. In this regard it is pertinent to note that whether in earlier year, claim for exemption under s. 10A/10B has been actually allowed or not is subject to verification. However, in this regard, it is apt to mention that while considering allowability of exemption under s. 10A/10B, AO is required to examine in light of what is actually allowed and not notionally allowed as per ratio laid down by apex Court in case of CIT vs. Mahendra Mills (supra). If in earlier/subsequent years, there is no profit, question of actual allowance of exemption under s. 10A/10B does not arise and same is to be taken as exemption under s. 10A/10B actually not allowed. On basis of our above finding, total income of assessee for asst. yrs. 2001-02 to 2004-05 under appeals before us is required to be verified and recalculated by AO. We therefore, set aside matter to file of AO with direction to recompute total income in accordance with above direction after providing reasonable opportunity of hearing to assessee. In result, appeals are allowed for statistical purposes. *** Techtran Polylenses Ltd. v. Income-tax Officer