TaxTMI 
TaxTMI 
2014 (4) TMI 531
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....incurred an expenditure of Rs. 70,43,595/-. The appellant having fulfilled the conditions of Section 35(2A)3) of the Act is entitled to a weighted deduction of Rs. 1,05,65,392/-. 2. Without prejudice to above and in an alternate to ground 1 above, the Learned Commissioner of Income-tax (Appeals) erred in holding that the expenditure of Rs. 70,43,595/- incurred is capital in nature. It is submitted that the appellant has incurred the said expenditure wholly and exclusively for the purpose of business. The expenditure of Rs. 70,43,595/- incurred by the appellant is revenue in nature and ought to be allowed as deduction in computing the income for the year. The conclusion arrived at by the Commissioner of Income-tax (Appeals) and the learned Assessing Officer is contrary to the facts and the law. 3. The learned Commissioner of Income-tax (Appeals) erred not directing the assessing officer to delete the addition of Rs. 1,08,48,954/- erroneously made on account of bad debts. It is submitted that learned Commissioner of Income-tax (Appeals) while adjudicating that bad debts of Rs. 8,24,978/- are to be....
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....or the purpose of tax exemption or for quantum of tax concession. Thus, he disallowed the assessee's claim of Rs. 1,05,65,392. 4. Before the learned Commissioner (Appeals), besides reiterating the explanation given before the Assessing Officer the assessee also relied heavily upon the decision of the Tribunal in ACIT v/s Meco Instruments Pvt. Ltd., ITA No.4246/Mum./2009, order dated 20th August 2010, wherein it was held that even though the approval was not available in the prescribed form for the relevant assessment year, the tax payer was still entitled for deduction for the inhouse R&D expenditure. The Tribunal also held that it is only a procedural defect and benefit cannot be denied. The learned Commissioner (Appeals) rejected the assessee's submission and held that provisions of section 35(2AB)(1) r/w rule-6 makes it clear that the deduction can be allowed only when the approval is granted by the prescribed authority in the prescribed form. Further, the assessee company has not placed any copy of approval from the prescribed authority in the prescribed form no. 3CM. The copy of letter dated 14th November 2005, signed by the "Scientist-G" according recognition to th....
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.... terms and conditions of the recognition of In-house R&D unit framed by the Ministry of Science and Technology, the assessee company is required to submit brief summary of the achievements of the R&D unit to the Department of Science and Industrial Research every year which includes paper published, patents obtained and processes developed, new products introduced, awards and prizes received and other achievements. Further, as per clause 8, commercial exploitation of the know-how/process developed by in-house R&D Unit was to be solely governed by the licensing policies in operation from time to time and the decision of the licensing authorities in this regard is considered to be final. Thus, stringent conditions have been imposed by the prescribed authority itself though the said approval was not meant for tax exemption but in substance, there was not much difference between the objects sought to be achieved by these approvals. 6.4 Further, in any view of the matter, at best it could be said that it was only a procedural defect and from the various decisions, noted in the arguments of Id Counsel for the assessee, it is clear that merely on the ground of techni....
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....; "DIL Complex", Opp. Vidyapeeth Swami Vivakananda Road Mijiwada, Thane 400 607 Subject: RENEWAL OF RECOGNITION OF IN-HOUSE R&D UNIT (S) Dear Sirs, This has reference to your application for renewal of recognition of your in-house R&D unit beyond 31.03.2005 by the Department of Scientific and Industrial Research. 2. This is to inform you that it has been decided to accord renewal of recognition to the in-house R&D unit of your firm at VIII, Takoll, PO Nagwain, Mandi Dist., H.P. upto 31.03.2008. Terms and conditions pertaining to this recognition are given overleaf. 3. Kindly acknowledge receipt of this letter. Yours faithfully, Sd/- (R.R. Abhyankar) Scientist-G" 10. On the face of the letter, it is evident that the said letter issued by DSIR is only for renewal of recognition of inhouse R&D units. There is no formal order or approval for such inhouse R&D facilities in the prescribed form under section 35(2AB). The Revenue....
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....or the assessee subsequent years that the DSIR has granted order of approval in form no. 3CM which has been signed by the Scientist-G for and on behalf of the Secretary, DSIR. Once the DSIR has authorized any of its Nodal Officer to issue order of approval on or behalf of the Secretary, then for the purpose of section 35(2AB), it can be taken that the approval has been granted by the prescribed authority itself. Whether the order has been signed by the Secretary or by any of the Nodal Officer on his behalf will not make any difference because it is not the fault of the assessee. In such a case, claim for deduction cannot be denied to the assessee. 12. In the present case, however, the assessee could not show us whether, any approval of inhouse R&D facilities has been issued in prescribed form by the DSIR, even if it is signed by any authority like Scientist-G for on/or behalf of the Secretary, DSIR. In the subsequent years, if such an order is available, then the assessee has to show that the order of the approval for inhouse R&D facility has been granted by the DSIR covering the present assessment year. Therefore, we set aside the impugned order passed by the learned Commission....
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....and relied upon the decision of the Hon'ble Supreme Court in TRF Ltd. v/s CIT, [2010] 323 ITR 397 (SC). 17. Before us, the learned Counsel for the assessee drew our attention to the amount debited to the Profit & Loss account of Auribindo Pharma. He submitted that the amount of Rs. 1,08,48,951 pertained to different customers and parties. In the name of Auribindo Pharma, the assessee has claimed only bad debt of Rs. 8,24,978. This is evident from Page-144 of the paper book. Further, he submitted that the law is absolutely clear that once the assessee has written of the bad debts in the books of account, then it has to be allowed while computing the profits. 18. The learned Departmental Representative, on the other hand, relied upon the findings of the Assessing Officer and submitted that if there is some discrepancy in the figures, the matter can be remanded back to the file of the Assessing Officer. 19. We have carefully considered the rival contentions, perused the orders of the authorities below and the material available on record. On a perusal of the details as pointed out by the learned counsel, it is seen that in the case of Auribindo Pharma, the assessee had sh....