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2018 (5) TMI 940
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....its that, in view of this subsequent development, ground no.3 is not required to be adjudicated in this appeal. Learned Departmental Representative does not oppose the submissions so made by the learned Counsel. We, therefore, dismiss ground no.3 as infructuous. 3. Ground no.3 is, therefore, dismissed as infructuous. 4. In ground nos.1 & 2, which are interconnected, the grievances raised are as follows :- "1. The Learned CIT(A) has erred in law and on facts of the appellant's case in confirming the action of Learned A.O. of disallowing the claim of weighted deduction of Rs. 1,12,84,050/- u/s.35(2AB) of the Act 1961 on various erroneous pleas. 2. Both the lower authorities have erred in law and on facts of the appellant's case in not appreciating the fact that the appellant's R&D Centre is duly approved and has fulfilled all the requirements for claiming the deduction u/s.35(2AB) of the Act." 5. Briefly stated, the relevant material facts, as culled out from material on record, are as follows. The assessee before us is a company engaged in the business of manufacturing and trading of telecommunication and security equipment etc. During the course of scruti....
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.....Y. 2010-11 relevant to A.Y. 2011-12. However in reply at point no.10, the assessee submits that the facilities were ready on 15.10.2009, the company made application based on the situation as on 15.10.2009, the same was approved, this therefore means that the facility was approved w.e.f. 15.10.2009, in view thereof all expenditure incurred by the company after 15.10.2009 should be allowed as weighted deduction. With the reply the assessee has also submitted a copy of Form No.3CM dated 5.7.2011. On verification it is observed that the Ministry of Science and Technology, Department of Scientific and Industrial Research, New Delhi has in form No.3CM dated 5.7.2011 granted approval of in-house R&D facility u/s.35(2AB) of the IT Act to the assessee by noting that "......... the above Research & Development facilities are approved for the purpose of sec.35(2AB) from 1.4.2010 to 31.3.2012............". It means that the assessee is eligible for weighted deduction u/s.35(2AB) @150% .w..ef F.Y. 2010-11 to F.Y. 2011-12 only relevant to A.Y. 2011-12 to A.Y. 2012-13. Furthermore it may be mentioned that, Department of Scientific and Industrial Research, New Delhi had issued a letter ....
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....gs u/s. 271(1)(c) of the I.T. Act, 1961 are separately initiated for furnishing inaccurate particulars of income. [Addition: Rs. 1,12,84,050/-]" 6. Aggrieved, assessee carried the matter in appeal before the learned CIT(A) but without any success. While confirming the action of the Assessing Officer, learned CIT(A) observed as follows :- "6.3.5. When the facts of the appellant's claims are analyzed in view of the provisions of the Act, the relevant rules and guideline for approval of in-house R&D centers and reporting of expenditure u/s 35(2AB) of the IT Act 1961 as updated on 26/05/2009 and published by department of Scientific and Industries Research, Ministry of Science and Technology, New Delhi, following conclusions Emerges: I. The appellant made application for approval for the deduction u/s 35(2AB) on 18.05.2010, As on that date, the appellant was already having R&D centre which had already been duly approved by DSIR on 31.03.2010. II. Under these circumstances as per Clause (i) of policy for approval of DSIR, the approval could have been given only from the 1April of the year in which application was made in Form 3CK. Accordingly t....
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....n made on 18.05.2010. Thus the appellant has been already granted deduction w.e.f. 1April of the financial year in which the application was made and thus the ratio of decision in the case of Claris Life Science Ltd. (supra) has already been followed. 6.4.1. Besides in the decision before the Honorable High Court, the guidelines of the DSIR were not there. These guidelines, as applicable to the current year, have already been discussed above and on the basis of these guidelines, the appellant is not eligible for deduction u/s 35(2AB) for the current year as it has not fulfilled the conditions listed in these guidelines. The appellant has also relied upon the decision of Honorable Delhi High Court in the case of Sandan Vikas (India) Ltd. (Supra). This decision also pertains to A.Y. 2005-06 to which the current guidelines of DSIR were not applicable. Hence these decisions cannot be applied to the appellant's appeal for A.Y. 2010-11. 6.5. On the basis of these discussions, it is held that the AO has rightly denied deduction u/s 35(2AB) to the appellant. Hence this ground of appeal is dismissed." 7. Aggrieved, the assessee is in further appeal before us. 8. ....
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....ply for approval under Form 3CK, though recognition was granted to its R&D Centre. The said Form 3CK consists of the Agreement to be entered into with the DSIR, in Part B. The omission by the Petitioner was held against it and this Court held that since the Petitioner had omitted to obtain the approval under Form 3CK, it is not entitled to the benefit of Section 35(2AB) since 2004. The facts of the present case are different and there has been no omission by the Petitioner herein to obtain approvals. The stage for approval arises after the recognition is granted by the DSIR, for which the application was filed right at inception by the Petitioner. Upon obtaining recognition, which was granted on 26th March 2014, the Form 3CK was filed on 31st March 2014. There has been no lapse of time, unlike in Apollo Tyres (supra)wherein the recognition was granted on 31st March, 2004 and the Form 3CK application was made only on 21st August, 2008. Thus the present case is clearly distinguishable from the facts in Apollo Tyres (supra). 43. In the present case, it could be true that there are some errors in the Petitioner's application dated 31st October, 2011, however, one cannot ig....
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....rming the action of the Learned AO of disallowing reimbursement of advertisement expense of Rs. 19,32,177/- u/s.40(a)(ia) of the Act on the erroneous plea that TDS was deductible on the same and the appellant has not deducted the same." 14. Briefly stated, the relevant material facts are like this. During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the assessee has incurred certain advertisement and exhibition expenses, through an intermeditary - namely Ashish Mistry, but not deducted tax at source. The assessee did point out that these expenses represent only credit notes for reimbursement of expenses to the extent of 35% and 50% as per respective agreements and the expenses were not actually incurred by the assessee. However, the Assessing Officer did not accept the explanation of the assessee and held that the assessee ought to have deducted tax at source from these payments but the assessee has not done so. As a corollary to this finding, the Assessing Officer proceeded to disallow the said expenses which aggregated to Rs. 19,32,177/-. Aggrieved, assessee carried the matter in appeal before the ld. CIT(A) but without any success. The CIT....
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....e CIT(A) in holding the above the appellant-revenue preferred appeal before the Income Tax Appellate Tribunal and by the impugned order the Income Tax Appellate Tribunal has confirmed the order passed by the CIT(A). It is required to be noted that while confirming the order passed by the CIT(A) and deleting the disallowance, it has been specifically observed by the tribunal that in fact the expenses were incurred by the agent on behalf of the assessee for transportation and other charges, which has been spelt out in the bill itself including the commission to the agent. The learned tribunal also observed that the relation between the assessee and the agent is principal and an agent. The learned tribunal also observed that so far as the obligation to deduct tax at source from the payment of transport charges and other charges is concerned, the same was complied with by the agent, who had made payment on its behalf. On the aforesaid facts the learned tribunal also observed that the circular relied upon by the revenue that it is the liability of the assessee as principal agent to deduct the TDS will not be applicable and the said circular would be applicable for payment made to princi....