2018 (8) TMI 663

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....s are assessee-company filed its return of income for the A.Y. 2012-13 on 08.09.2012 admitting total income of Rs. 24,00,510/-. The case was selected for scrutiny under CASS. Assessing Officer completed the assessment u/s 143(3) of the Act on 30.05.2014 determining the total income at Rs. 42,74,025/-. Subsequently, Ld. CIT invoked jurisdiction u/s 263 and issued a showcause notice to the assessee stating "on perusal of the record, P & L Account and balance sheet, it was noticed that the assessee claimed deduction u/s 35(2AB) of the I.T. Act at Rs. 2,71,17,627/-". Ld CIT-2 observed that "as per the I.T. Act, to avail weighted deduction u/s 35(2AB) the assessee had to submit the form 3CM order of approval of in-house research and development ....

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..... In the absence of these forms, allowance of weighted deduction is not allowable. The Assessing Officer has neither called for these details nor examined this aspect but has allowed the claim of weighted deduction u/s 35(2AB) of the I T Act, 1961 and this is an "error" and caused "prejudice to the interest of revenue". Not conducting enquiries where it is required, is "error" as held by the Hon'ble Supreme Court in the case of Tara Devi Agarwal vs. CIT (88 ITR 323) (SC) and Ram Pyari Devi vs. CIT (67 ITR 84) (SC). When the A.O. has not conducted any enquiry and gave relief to assessee, it caused serious prejudice to the interest of Revenue. Therefore, I have come to the conclusion that the assessment made is erroneous and prejudicial to th....

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....o role in that, except filing form in 3CK which it did. Since the assessee complied with the conditions prescribed and A.O. enquired and allowed the claim, the exercise of jurisdiction by the Pr. CIT is bad in law. Ld Counsel relied on the coordinate Bench decision on the same issue as under:- (i) Sri Biotech Laboratories India Ltd vs. ACIT (36 ITR (Trib) 88) and (ii) Texaco Rail & Engineering Ltd vs. Pr. CIT (86 Taxmann.com 50) (Kolkata - Trib.) 7. Ld CIT-DR reiterated the stand taken by Pr. CIT and submitted that Coordinate Bench in the case of Sri Biotech Laboratories India Ltd., (supra) has allowed A.O. to modify the order and referred to para 13 of that order. 8. We have considered the rival contentions and perused the document....

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....al Chief Commissioner of Income-tax or Chief Commissioner of Income-tax or Principal Director General of Income-tax or Director General of Income-tax having jurisdiction over such company within one hundred and twenty days,- (i) of the grant of the approval, in a case referred to in sub-clause (i) of clause (b); (ii) of the submission of the audit report, in a case referred to in subclause (ii) of clause (b);] (c) The company shall maintain a separate account for each approved facility; which shall be audited annually and [a report of audit in Form No.3CLA shall be furnished electronically to the Secretary, Department of Scientific and Industrial Research on or before the due date specified in Explanation 2 to sub-section (1) of se....

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....in the proceedings before the CIT u/s. 263 of the Act and before the Tribunal that deduction Sec.35(2AB) read with rule 6 does not prescribe any time limit within which application for approval in form No.3CM has to be made. Once approval is granted by DSIR the same would apply till it is revoked. The Hon'ble Gujarat High Court and the Hon'ble Delhi High Court in the case of Claris Lifesciences Ltd., and Sadan Vikas (India) Ltd., have taken the view that on a plain and harmonious reading of rule 6(5A) and Form No. 3CM it would be appropriate to come to a conclusion once a research facility is approved, the entire expenditure so incurred on development of R&D facility has to be allowed for weighted deduction as provided by s. 35(2AB)....