Assessee Appeals Partly Allowed, Higher Deductions Granted, Section 14A Remanded for Verification

The appeals of the assessee for assessment years 2011-12 and 2012-13 were partly allowed. The disallowances made under sections 35(2AB) and 35(1)(iv) were rectified, with the assessee being entitled to claim higher deductions. The challenge under section 14A for the assessment year 2012-13 was remanded for fresh verification due to incorrect disallowances made by the assessee.

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Issues:
1. Disallowance made under section 35(2AB) for assessment year 2011-12.
2. Disallowance made under sections 35(2AB) and 35(1)(iv) for assessment year 2012-13.
3. Challenge to the addition made under section 14A for assessment year 2012-13.

Issue 1: Disallowance under section 35(2AB) for AY 2011-12:
The appeal addressed the disallowance made under section 35(2AB) of the Income Tax Act. The Assessing Officer disallowed a portion of the deduction claimed by the assessee. The CIT(A) confirmed the disallowance. The contention was that the assessee was entitled to claim deduction at a higher rate based on the expenditure incurred. The Tribunal referred to a similar case for AY 2010-11 where the claim was allowed without requiring certification from the DSIR. The Tribunal held that the assessee was entitled to claim deduction at a higher rate and directed the AO to allow the remaining deduction. The deduction disallowed by the AO was subsequently deleted, and the ground raised by the assessee was allowed.

Issue 2: Disallowance under sections 35(2AB) and 35(1)(iv) for AY 2012-13:
Regarding the disallowance under sections 35(2AB) and 35(1)(iv) for AY 2012-13, the AO had restricted the deduction based on the quantification by the DSIR. However, the Tribunal, referring to its decision in the AY 2011-12 case, held that the assessee was entitled to claim a higher deduction. The Tribunal directed the AO to allow the increased deduction. Additionally, a mistake in claiming deduction under section 35(1)(iv) @ 100% was rectified, and the AO was directed to allow the deduction at 200%. The grounds raised by the assessee were allowed in this regard.

Issue 3: Challenge to the addition under section 14A for AY 2012-13:
The challenge was against the addition made by the AO under section 14A of the Act. The assessee had initially made a disallowance under Rule 8D (2)(iii) of the Rules, which was later increased in the revised return. The CIT(A) confirmed the disallowance. The Tribunal noted that the issue required fresh verification as the assessee had inadvertently made incorrect disallowances. The matter was remanded to the AO for fresh consideration, allowing the assessee to provide supporting evidence. The ground raised by the assessee was allowed for statistical purposes.

In conclusion, the appeals of the assessee for AY 2011-12 and AY 2012-13 were partly allowed, with the disallowances under section 35(2AB) and section 35(1)(iv) being rectified, and the challenge under section 14A being remanded for fresh verification.

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