TaxTMI 
TaxTMI 
2013 (9) TMI 41
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.... relied on Circular NO. 786 dated 07.02.2000 issued by the CBDT to the effect that commission paid to foreign agents for procuring orders does not require deduction of tax at source under Section 195 nor can the commission amount be disallowed under Section 40(a)(i). 4. The CIT(A) dealt with in detail about various agents and particulars of commission paid to them. He also relied on various decisions while allowing the claim of the assessee and the CIT(A) further held as follows: "4.2...............As stated earlier identical issue has been decided by me in assessee's onw case for ASSESSMENT YEAR 2005-06. While deciding the appeal for that year I had discussed the issue in detail and relying on various judicial pronouncements including the decision of ITAT Hyderabad in the case of Dr. Reddy's Laboratories Ltd in ITA No. 621/Hyd/2000 dated 24/08/2007 for the ASSESSMENT YEAR 1997-98 and in the case of ACIT Circle-2(3) Vs. M/s Premier Explosives Ltd. in ITA No. 736/Hyd/03 dated 25/04/2008 I had allowed the ground of the assessee. In view of the fact that the issue in the year under consideration is identical to the one in the ASSESSMENT YEAR 2005-06 following the stand taken in ....
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....t while computing taxable income, the assessee had added back Rs. 45,97,325/- (Rs.44,70,010/- + Rs. 1,27,315/) to its total income and thereafter had claimed deduction u/s 35(2AB) @ 150%. The assessee contended that the Assessing Officer disallowed the claim u/s 35(2AB) without correspondingly allowing the revenue expenditure which was added to the computation of income, which tantamounts to double addition. The assessee also contended that Rs. 45,97,325/- which was originally added to the computation of total income should be deducted from the total income. The assessee also submitted that identical issue was decided by the CIT(A) in assessee's own case for ASSESSMENT YEAR 2005-06. After considering the submissions of the assessee the CIT(A) held as under:- "5.1 I have gone through the facts of the issue. I f ind that in the computation of total income f iled along with the return of income, the appellant had added back Rs. 45,97,325/- to its net prof it in the P&L A/CIT (A) and had thereaf ter claimed deduction u/s 35(2AB) of Rs. 68,95,988/-. The Assessing Off icer has disallowed the claim u/s 35(2AB) on the ground that the requisite certif icate from the prescribed authority ....
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.... approval of the facil ity by the prescribed authority, which is the Department of Scientif ic and Industrial Research; and (iv) allowance of weighted deduction on the expenditure so incurred by the assessee. The provisions nowhere suggest or imply that the research and development facil ity is to be approved from a particular date. In other words, it is nowhere suggested that the date of approval alone wil l be the cut-off date for eligibility of weighted deduction on the expenses incurred from that date onwards. The assessee has to develop the facil ity, which presupposes incurring expenditure in this behalf , application to the prescribed authority, who af ter following proper procedure will approve the facility or otherwise and the assessee wil l be entitled to weighted deduction of any and all expenditure so incurred." 11. The learned counsel for the assessee also relied upon the decision of Hon'ble Gujarat High Court in the case of CIT Vs. Claris Lifesciences Ltd., [2008] 174 Taxman(Guj.) 113 wherein it has been held as under:- "The provisions of section 35(2AB) nowhere suggest or imply that 'research & development' facil ity is to be approved from a particular date and....
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....ure if any not approved by the DSIR will have to be considered for deduction under section 35(1) or under normal provisions of the Act. The expenditure has been incurred by the R & D facility of the assessee approved by the Government of India. Merely because part of the expenditure incurred by the approved R & D facilities is not considered for weighted deduction under Section 35(2AB) would not render expenditure is not towards R & D or not for the purposes of the business. Allowability of such expenditure u/s 35(1) or under other appropriate provisions of the Act will have to be considered. 13. Hence, the cross objection(C.O. No. 47/Hyd/09) claiming weighted deduction under Section 35(2AB) on the ground that requisite certificate from the DSIR has been received is treated as allowed for statistical purpose. 14. In the circumstances, the second ground of appeal raised by the revenue is treated as allowed for statistical purposes. 15. In the result, revenue appeal in ITA NO 901/H/09 is partly allowed for statistical purposes and CO No 47/H/09 is allowed for statistical purpose. ITA NO. 1415/Hyd/08 for AY 2006-07 16. As regards ground No. 1 regarding disallowance made....
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....the decision of the ITAT Special Bench in the case of JCIT Vs. ITC Ltd., 112 ITD 57), wherein, it was held that when it is not disputed that the assessee has been maintaining a research unit, then the natural conclusion, in the absence of any evidence to the contrary, should have been that the work for which these units are run must have been carried out. In the light of the above submission, the assessee urged that the disallowance u/s 35(1) made by the Assessing Officer be deleted. After considering the submissions of the assessee, the learned CIT(A) examined the issue with case laws and held as under:- "5.9 Accordingly, in my view, the rejection of the claim u/s 35(1)(iv) of the appellant by the Assessing Off icer of the capital expenditure incurred by the assessee is not justif ied. Further, as per section 35(3)(b) of the Act, if any question arises under this section as to whether and if so to what extent, any activity constitutes or constituted or any asset is or was being used for scientif ic research, the Board shall refer the question to the prescribed authority when such question relates to any activity other than the activity specif ied in clause (3)(a). I do not f in....