TaxTMI 
TaxTMI 
TaxTMI 
2016 (12) TMI 1539
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....rame afresh assessment in assessee's case. All this culminates into assessee's grievance as adjudicated in the instant appeal hereunder. 3. We advert to the relevant facts now. The assessee (earlier M/s. Ranbaxy Laboratories Ltd.) is a company manufacturing and trading in pharmaceuticals and bulk drugs. It filed its return on 27.09.2009 stating loss of Rs. 44,14,10,77,665/- along with book loss computed u/s.115JB amounting to Rs. 29,47,15,15,100/-. The Assessing Officer took up scrutiny. He issued Section 143(2) notice on 23.08.2010 inter alia seeking details of assessee's weighted deduction claim raised hereinabove alongwith necessary approval thereof. The assessee filed reply on 10.09.2010 placing on record the above particulars sought for. It is evident to us that assessee's return filed also contained its notes of accounts statement indicating the factual backdrop of its weighted deduction claim. It transpires that assessee's in house research and development facilities were approved by the prescribed authority on 11.06.2009 qua the impugned expenses incurred during the financial year 2008-09. The Assessing Officer then framed a regular assessment on 30.01.2014 accepting asses....
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.... is considered to be erroneous as well as prejudicial to the interest of revenue. You are, therefore, allowed an opportunity of being heard and show cause as to why an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment within the meaning of section 263 of the I. T. Act may not be passed in the case of Assessee Company." 5. The assessee filed reply to the above show cause notice on 21.03.2016. It first of all raised a legal contention that the above assessment sought to be revised was neither erroneous nor prejudicial to interest of the Revenue as per hon'ble apex court's land mark decision in Malabar Industrial Co. vs. CIT 243 ITR 83 (SC). It then pleaded to have placed all necessary documents of having carried out in house research and development for the purpose of claiming the above weighted deduction u/s.35(2AB) of the Act since having filed notes to return of income, computation of income along with clause 15 of tax audit report as followed by its reply to the scrutiny notice hereinabove. The assessee would highlight the fact of having obtained Form 3CM approval from the prescribed authority. The assessee's case thereaft....
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....ons of section 35(2AB) of the Act and various judicial decisions, the assessee contended that the A.O after verifying the annual accounts, return of income and tax audit report, the Assessing Officer had decided to accept the contention of the assessee. It was the assesseessee's view that there is no requirement under the Income tax Act or the Income Tax Rules for either the assessee to produce Form 3CL and the A.O. to allow deduction only on the production of Form 3CL. The asssessee also contented that the issuance of Form 3CL was not the obligation of the assessee and it cannot be denied of benefits which it was 3CL was not the obligation of the assessee and it cannot be denied of benefits which it was otherwise entitled to because of non issuance of Form 3CL which was the responsibility of the DSIR. It was the assessee's contention that the Assessing Officer after considering all the relevant factual details and after considering the judicial precedents on the subject had decided to allow deduction u/s. 35(2AB) even where the assessee had not received Form 3CL, The assessee further contended that it had fulfilled all the conditions for claiming deduction u/s. 35(2AB) of ....
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.... it not been so, when words "expenditure incurred" would not have find place in the contents of Rule_6(7A) of I.T. Rules. The provision of section 35(2AB) mandates that approval of D.S.I.R., is the appropriate authority vested with the powers to determine the extent to which approval of expenditure can be accorded to an assessee who has incurred expenditure on R & D Facility, after considering ail the issues involved., after pursuing the report of the assessee in the matter. The intention of the legislature in introducing the concept of approval of expenditure on R & D in section 35(2AB) r.w.r 6 of the Act is to enable the assessee to achieve the objective of enjoying fruits of R & D facility for furtherance of its business activity and at the same time to ensure that the assessee is not allowed to claim excess weighted deduction u/s, 35(2AB) of the Act. Thus the approval of expenditure accorded by D.S.I.R. in form 3CL is a guiding factor to the A.O. to determine as to whether the assessee had correctly claimed weighted deduction u/s. 35(2AB) of the Act or not. In the instant case, the assessee has not produced any evidence to prove that it had filed all requisite documents and sub....
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....above approval Form 3CL. 7. We have given our thoughtful consideration to rival contentions as well as ld. PCIT's concern expressed in order revising the above regular assessment. We deem its appropriate at this stage to throw some light on the nature and ambit of Form 3CL. The same comes under Rule 6(7A) of the Income Tax Rules, 1962 framed under the provisions of the Act. The above sub rule is relevant for approval of expenditure incurred on in house research & development facility by a company u/s.35(2AB). Sub clause (b) thereof is the specific provision thereto stipulating that the prescribed authority shall submit its report in relation to the approval of in house Research & Development facility in Form No.3CL to the Director General (Income Tax Exemptions) within 60 days of its granting approval. The same is merely in the form of intimation to be sent from prescribed authority's end to the department. An assessee engaged in such Research & Development activity having already obtained Form 3CM approval of its facility has no role to play in such correspondence. We notice that a co-ordinate bench of this tribunal in ACIT vs. M/s. Torrent Pharmaceuticals ITA No.3569/Ahd/2004 de....