TaxTMI 
TaxTMI 
2013 (3) TMI 644
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....the period being previous years relevant to AY 02-03 & 03-04. Therefore the penalty proceedings were in the name of the Assessee. 3. In the A.Ys. 2002-03 & 2003-04, the erstwhile company EDL claimed deduction on account of capital expenditure on scientific research as a deduction while computing income. This claim for deduction was made under the provisions of section 35(1)(iv) of the Income-tax Act, 1961 [hereinafter referred to as "the Act" in short"], which provides that any expenditure of a capital nature on scientific research related to the business carried on by the assessee shall be allowed as a deduction in computing total income. The AO as well as the CIT(Appeals) did not accept the claim of the assessee that the expenditure claimed as a deduction was in respect of scientific research related to the business carried on by the assessee. Even the Tribunal has not accepted the claim of the Assessee. 4. In respect of the disallowance of the claim for deduction so made, proceedings u/s. 271(1)(c) of the Act were initiated. An order u/s. 271(1)(c) of the Act dated 30.12.2008 was passed by the AO for both the aforesaid assessment years holding that the claim for deduction ....
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....was no sufficient cause for the delay in filing the appeals by the assessee before him. In this regard, the CIT(A) was of the view that the assessee is guilty of carelessness and laxity. He also noticed that in the quantum proceedings, even the ITAT has confirmed the refusal of the claim for deduction made by the assessee u/s. 35(1)(iv) of the Act. The CIT(A) accordingly dismissed the appeal of the assessee as unadmitted. Aggrieved by the impugned order of the CIT(A), the assessee has filed the present appeals before the Tribunal. 8. Before us, the ld. counsel for the assessee apart from reiterating the stand of the assessee before the CIT(A), also submitted an affidavit of one K. Krishna Bhatt, an employee of the assessee. It is relevant to point out here that it was K. Krishna Bhatt who signed the tear-off acknowledgement slip evidencing service of the order u/s. 271(1)(c) of the Act on 31.12.2008, on behalf of the assessee. In his affidavit, K. Krishna Bhatt has affirmed that he was an employee of the assessee and that he had collected the penalty orders for both the assessment years from the income-tax department. After collecting the orders on 31.12.2008, he had proceeded o....
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....hat the department proceeded with recovery of amounts from the directors of the company and in this regard notice u/s. 220(2) of the Act was served on the directors on 11.11.2010. It is thereafter that the assesse, realizing the seriousness of the situation, approached the present AR for further course of action. The present AR has made an application for issue of duplicate copies on 29.12.2011 and on receipt of the same filed appeals within a period of three weeks. 13. We also find that the penalty in question has been imposed in respect of rejection of a claim made u/s. 35(1)(iv) of the Act. The question as to whether a penalty can be imposed for rejecting a claim made by the assessee requires to be examined. We are of the view that the delay is occasioned due to sufficient cause as discussed above. If the delay is not condoned, the assessee will be put to serious hardship in as much as huge penalty will be imposed on the assessee for concealment, which on facts, requires examination as to whether rejection of a claim made by the assessee for deduction would amount to concealment or not, especially in the light of the decision of the Hon'ble Supreme Court in the case of Relian....
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.... electronically and the assessee attempted to file the return of income electronically. The same was not accepted because the assessee did not pay self-assessment tax. It was also pointed out that the assessee was could not pay self-assessment tax due to financial problems and the same was paid only on 26.02.2007. Thereafter on 27.02.07, the return of income was filed electronically in which the claim for deduction u/s. 80IB was made. The assessee relied on the decision of the Delhi Bench of the Tribunal in the case of ACIT v. Dhir Global Industries Pvt. Ltd. (ITA No.2317/Del/2010), wherein in respect of an identical provision u/s. 10B of the Act for making a claim of deduction u/s. 10B of the Act, the Delhi Bench of the Tribunal condoned the delay and allowed exemption u/s. 10B of the Act. 19. The ld. DR, on the other hand, brought to our notice the decision of the Rajkot Special Bench of the Tribunal in the case of M/s. Sapphire Garments v. ITO, 2012 TIOL 735 ITAT Rajkot (SB), wherein the Special Bench by its order dated 30.11.2012 considered identical provisions u/s. 10A(1A) of the Act and expressed the view that such provisions are mandatory and not only directory. The Speci....
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....he assessee for deduction by observing that prior to the merger of EDL, the assessee had not made any such claim, he was therefore of the view that the nature of the activities for deduction for which deduction u/s. 35(1)(iv) of the Act was claimed by the assessee after merger with EDL was the same as was claimed by EDL. The AO referred to the fact that such a claim had been rejected by the revenue in the case of EDL. The AO therefore rejected the claim of the assessee for deduction u/s. 35(1)(iv) of the Act. 24. Before the CIT(A), the assessee pointed out that scientific research carried out by the assessee during the previous year was different from the one carried out by EDL. The assessee pointed out that research and development product was sealing and shielding plugs which form critical part of nuclear reactor preventing radiation. The assessee also pointed out that it designed and developed high-end healthcare products like sophisticated operation theatre tables, anesthesia machines and EV 600 ventilators. The assessee gave a description of the research & development activities as an Annexure to the submissions before the CIT(A), which is also annexed as Annexure to the wr....
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....istry of Science & Technology, Govt. of India. A certificate granting such recognition is sought to be filed as additional evidence before us and the same is contained in pages 12 to 14 of the assessee's paperbook. 27. We have considered the submissions of the ld. counsel for the assessee and the ld. DR. The description of expenditure incurred on research & development activities done by the assessee is given as Annexure-I to this order. It can be seen from the same that there is no break-up of the expenses given and as to how they are capital expenditure incurred for scientific research and development. A general description given in our view will not be sufficient. The relationship of each item of expenditure and its relation to the various activities set out in the Annexure and how they are in the nature of scientific research and development has to be given by the Assessee. The AO did not examine the issue as he has proceeded on the assumption that the activities are akin to the one carried out by EDL. The CIT(A) in his impugned order has not examined and given a finding as to whether the expenses in question can be said to be of the nature of capital expenditure on scientif....
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.... rejected the claim of the assessee for deduction u/s. 35D of the Act holding that the expenditure is capital in nature. On appeal by the assessee, the CIT(A) confirmed the order of the AO for the following reasons:- "11.2 I have considered the above. The provisions of Sec 35D is applicable when the expenditure is incurred after the commencement of business for extension of the industrial undertaking or setting up a new industrial unit and such expenditure may be incurred on preparation of a feasibility report/project report/conducting market survey. The A.R. pleaded that the expenditure of Rs. 1,01,59,162/- had been incurred towards cost of feasibility and preparation of project repot and the total expenditure had been amortised and therefore the claim has been limited to 1/5th i.e. Rs. 20,31,832/-. However, I find the expenditure has been incurred on increasing the Authorised Share Capital from 6 crores from A.Y.2005-06 to Rs. 12 Crores in A.Y.2006-07. Therefore, the A.O. has rightly held the same as capital expenditure. The addition is confirmed. Appeal on this issue is decided against the appellant." 34. A perusal of the order of the CIT(A) clearly reveals that he has pro....
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....d therein, this appeal as well as the CO is treated as allowed for statistical purposes. 39. The issue raised by the Revenue in Ground No.5 of the grounds of appeal is with regard to the action of the CIT(A) in allowing the claim of the Assessee for deduction u/s.35D of the Act. This issue is identical to the issue raised by the Assessee in ITA No.954/B/11 for A.Y.08-09. The Revenue disallowed the claim for deduction u/s.35D of the Act in AY 08-09 but allowed the claim in 09-10. While deciding the issue in Assessee's appeal for AY 08-09 we have already remanded the issue to the AO for fresh consideration. The deduction u/s.35D has to be allowed for a period of 5 years. The claim cannot be allowed in one year and disallowed in another year. Since the issue has not been properly examined by the CIT(A) in the present A.Y. and since identical issue has already been remanded to the AO for fresh consideration in AY 08-09, we are of the view that the issue in the present A.Y. should also be remanded to the AO for fresh consideration and as per directions given by us in AY 08-09. ITA 1401/12 The first issue raised by the assessee in this appeal is with regard to disallowance of 1/....