2018 (2) TMI 1582

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..... The learned Commissioner of Income Tax-1 (CIT) erred in setting aside the assessment order by invoking powers under s 263, when the said assessment order was neither erroneous nor prejudicial to the interests of the revenue. .. 2. The (earned CIT erred in exercising powers u/s 263, when the jurisdictional conditions for the same had not been satisfied. 3. The learned CIT erred in directing for disallowance of claim u/s 35. Such a direction was outside the scope of s 263, and on merits also, unsustainable. The learned CIT erred in insisting on compliance with additional conditions for allowing the said deduction, when such conditions are not at all mandated by s 35 or any other relevant section. 4. The Order of l....

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....R&D activities undertaken in its in-house R&D facility as the same has been approved by the competent authorities, i.e. Department of Scientific & Industrial Research. The assessee further submitted that it has furnished all details before the AO at the time of completion of assessment u/s 143(3) and the AO after fully satisfied with the explanation completed assessment u/s 143(3) without any adverse comment on deduction claimed u/s 35(1). Therefore, assessment order passed by the AO cannot be considered as erroneous insofar as it is prejudicial to the interest of the revenue. 4. The CIT, after considering relevant submissions of the assessee observed that there is no documentary evidence available on record to establish that either the ....

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....r submitted that the assessee has furnished various details in support of deduction claimed u/s 35(1) and the AO has examined the issue in the light of details filed by the assessee. Therefore, merely because there was no discussion in the assessment order about the deduction claimed u/s 35(1), an adverse inference cannot be drawn that the AO has not considered the issue. The Ld.AR further submitted that its R&D facility has been approved by the competent authority, i.e. Department of Scientific & Industrial Research, Government of India and its claim made in the earlier and subsequent assessment years has been accepted by the department. The Ld.AR further submitted that the Ld.CIT(A) erred in directing the AO to disallow claim of deduction....

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.... AO to disallow claim u/s 35(1). We do not find any merits in the arguments of the assessee for the reason that though assessee claims to have furnished necessary details before the AO in support of deduction claimed u/s 35(1) at the time of original assessment u/s 143(3), but failed to adduce any evidence to justify its claim. We further observe that the AO has allowed deduction claimed u/s 35(1) without any discussion as to whether the claim made by the assessee is in accordance with provisions of section 35(1) or not. We further notice that the authorised representative of the assessee accepted before the CIT that it has not maintained separate books of account in respect of R&D facility even though it was required to maintain separate b....