TaxTMI 
TaxTMI 
2019 (1) TMI 643
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....llowable on the purchase of above two machines for Rs. 26516377 1,06,06,550 Amount disallowed 2,73,76,249 The ld.CIT(A) vide order dated 09.03/2009 in Appeal No.72/07-08 partially allowed the appeal of the assessee on this issue. The ld.CIT(A) held that the assessee is eligible for deduction under Section 35(1)(iv) rather than under Section 35(2AB). The ld.CIT(A) held that the machines on which the claim of 100% of deduction under Section 35(1) is claimed being used research and development are separate and distinct from the machines which the assessee has used for the purpose of manufacturing process. Therefore, capital expenditure to the extent of Rs. 3,41,60,592/- is a allowable deduction as against the depreciation allowed by the AO. However, the claim of weighted deduction of Rs. 1,14,66,322/- @ 150% on R & D Equipments amounting to Rs. 76,44,215/- is not allowed, thereby Ld.CIT(A) confirmed the addition to the extent of Rs. 38,22,107/- (Rs.1,14,66,322/- minus Rs. 76,44,215/-). Similarly, the disallowance of weighted deduction on revenue expenditure to the extent of Rs. 23,46,050/- (Rs.70,38,750/- minus Rs. 46,92,500/-) as made by the AO is also confirmed by the ld.CIT(A)....
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....T Vs. Samtel India Ltd. - ITA No.43/2017. He stated that no details or particulars furnished by the assessee were found to be incorrect, false or wrong and, therefore, merely because the deduction is allowed at the rate of 100% as against 150%, it cannot be said that the assessee furnished inaccurate particulars of its income. He, therefore, submitted that the penalty levied u/s 271(1)(c) of the Act may be cancelled. 5. Learned Senior DR, on the other hand, stated that it is a clear case of furnishing of wrong particulars by the assessee. It was a wrong claim of deduction at 150% when the actual deduction is permissible at 100%. She, therefore, stated that on these facts, the following decisions of Hon'ble Jurisdictional High Court would be squarely applicable :- (i) CIT Vs. Morgan Finvest (P.) Ltd. - [2013] 213 Taxman 23 (Delhi)(Mag.). (ii) CIT Vs. Zoom Communication P.Ltd. - [2010] 327 ITR 510 (Delhi). 6. We have carefully considered the arguments of both the sides and perused the material placed before us. In the case of Reliance Petroproducts Pvt.Ltd. (supra), Hon'ble Apex Court held as under :- "Where there is no finding that any details supplied by the assessee i....
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....hed inaccurate particulars of his income. The instant case was not the case of concealment of the income. That was not the case of the revenue either. It was an admitted position in the instant case that no information given in the return was found to be incorrect or inaccurate. It was not as if any statement made or any detail supplied was found to be factually incorrect. Hence, at least, prima facie, the assessee could not be held guilty of furnishing inaccurate particulars. The revenue argued that submitting an incorrect claim in law for the expenditure on interest would amount to giving inaccurate particulars of such income. Such cannot be the interpretation of the concerned words. The words are plain and simple. In order to expose the assessee to the penalty unless the case is strictly covered by the provision, the penalty provision cannot be invoked. By any stretch of imagination, making an incorrect claim in law cannot tantamount to furnishing of inaccurate particulars. [Para 7]" Similarly, in the present scenario, the assessee cannot be penalized for making a claim which in itself is unsustainable in law. The Supreme Court further held in the Reliance Petrochemicals cas....
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....tain expenditure partly capital and partly revenue for research purposes. The genuineness of expenditure was not doubted by the Assessing Officer himself but he opined that the expenditure was incurred for the purpose of business of manufacturing and not for research purposes. The CIT(A) accepted that the expenditure was incurred for research purposes. The said order of learned CIT(A) has become final. Thus, the assessee's claim that it incurred the expenditure for the purpose of research has been upheld. The only disallowance sustained by the learned CIT(A) was with regard to the rate of deduction permissible for expenditure incurred on research. The assessee claimed deduction at the rate of 150% i.e., u/s 35(2AB) while the learned CIT(A) allowed deduction u/s 35(1)(iv). Therefore, in our opinion, the above decision of Hon'ble Jurisdictional High Court in the case of Morgan Finvest (P.) Ltd. (supra) would not be applicable to the facts of the assessee's case. 10. In the case of Zoom Communication P.Ltd. (supra), Hon'ble Jurisdictional High Court held as under :- "In the case of Reliance Petroproducts P.Ltd. [2010] 322 ITR 158 (SC), the addition made by the Assessing Of....