2023 (3) TMI 916 - AT - Income Tax

Tribunal partially allows appeal, remits deduction issue for verification, upholds second issue based on verified amounts.

The Tribunal partly allowed the appeal, remitting the first issue concerning further deduction u/s 80IA(4)(iv) back to the AO for verification. The second ... Deduction u/s 80IA(4)(iv) - income from eligible project - quantification of claim - claim was revised upward on the ground that, the assessee, in the original calculation of eligible profits, wrongly reduced the amount of depreciation under the Companies Act as against the required deduction under the Income-tax Act - HELD THAT:- CIT(A) allowed the claim without examining the veracity of the amount of depreciation under the Act as well under the Companies Act and further without calling for any remand report from the A.O. This shows that the figures of depreciation under the Companies Act at Rs. 95.43 lakhs and under the Act at Rs. 1,200/- in the fresh revised claim, have not passed out the verification test either by the ld. CIT(A) or the AO and further such figures are also not forthcoming from either the Computation of income or the Annual accounts for the year for verification at our end. Matter is remitted to the file of the A.O for examining the correctness of these two figures. We order accordingly. Deduction u/s 35(2AB) - A.O did not entertain such claim in absence of the assessee having furnished any revised return - HELD THAT:- Approval was granted after filing of the return by the assessee. Form No. 3CL indicates the amount of capital expenditure in respect of Dewas and Baner units at Rs. 14.31 lakhs and Rs.7.25 lakhs respectively and the amount of recurring expenditure for these two units at Rs. 108.62 lakh and Rs. 548.63 lakh respectively for the A.Y. 2014-15. The amount of further weighted deduction allowed in the first appeal to the tune of Rs. 7.00 crore is based on such amounts sanctioned by the Government of India, Ministry of Finance and Technology in respect of Dewas and Baner Units. Since the further claim is fully verifiable from the amount sanctioned by the Government of India, Ministry of Science and Technology, we are satisfied that no interference is warranted in the impugned order on this count in granting deduction on the basis of such certificates. We uphold the impugned order on this score. Appeal is partly allowed for statistical purposes. Issues involved: 1. Allowance of further deduction u/s 80IA(4)(iv) of the Income-tax Act, 1961.2. Granting of further deduction u/s 35(2AB).Issue 1: Allowance of further deduction u/s 80IA(4)(iv) of the Income-tax Act, 1961:The appeal by the Revenue challenges the order allowing a further deduction u/s 80IA(4)(iv) for Rs. 95,42,473. The assessee, engaged in manufacturing Power Driven Pumps, Valves, Hydro Turbines, and project execution & services, initially claimed deduction of Rs. 3,61,70,943 under section 80IA(4)(iv). During assessment proceedings, a revised claim of Rs. 4,57,13,416 was made, which included adding back depreciation under the Companies Act and reducing depreciation under the Income-tax Act, resulting in an increased eligible profit and deduction. The CIT(A) accepted this claim, leading to the Revenue's appeal. The Tribunal noted that the dispute was on quantification, as the eligibility conditions were met. However, the CIT(A) allowed the claim without verifying the depreciation figures under both Acts. The Tribunal remitted the matter to the AO for verification, emphasizing the need for correctness before final acceptance.Issue 2: Granting of further deduction u/s 35(2AB):The second issue pertains to granting a further deduction u/s 35(2AB) for Rs. 7,00,38,178. The assessee initially claimed Rs. 5,07,22,898 under this section but later claimed the additional amount after receiving approval post filing the return. The CIT(A) allowed this deduction after examining the necessary documents and certificates from the Government of India. Section 35(2AB) provides for weighted deduction on qualifying R&D expenditure in an approved in-house research unit. The approval for two units, Dewas and Baner, was received after filing the return, as evidenced by certificates from the Government of India. The Tribunal upheld the CIT(A)'s decision, as the further claim was based on verifiable amounts sanctioned by the Government, ensuring no interference was warranted.Conclusion: The Tribunal partly allowed the appeal for statistical purposes, remitting the first issue back to the AO for verification while upholding the CIT(A)'s decision on the second issue.