TaxTMI 
TaxTMI 
2019 (10) TMI 185
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....sions of Rule 8D and computed disallowance u/s. 14A at Rs. 81,41,319/-. While computing disallowance under Rule 8D, the Assessing Officer has considered all investments, irrespective of the fact whether the assessee has earned dividend income on the said investments or not. The Special Bench of Tribunal in the case of ACIT Vs. Vireet Investments (P) Ltd. reported as 165 ITD 27 (Del) (SB) has held that while computing disallowance u/s. 14A only those investments should be taken into consideration on which the assessee has earned dividend income exempt from tax. Similar view has been taken by the Pune Bench of Tribunal in the case of M/s. Quick Heal Technologies Ltd. Vs. DCIT in ITA Nos.1500 & 1710/PUN/2017 for assessment years 2012-13 and 2013-14 decided on 12-03-2019. The ld. AR stated at the Bar that if, while computing disallowance u/s. 14A in line with ACIT Vs. Vireet Investments (P) Ltd. (supra), the amount of disallowance goes below the suo-moto disallowance made by assessee, the assessee would not claim refund/adjustment of excess amount. 2.2 In respect of ground No. 2 relating to issue of weighted deduction claimed by the assessee u/s. 35(2AB) of the Act, the ld. AR submi....
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....sessee, the ground No. 1 raised in the appeal by the assessee is allowed for statistical purpose. 5. In ground No. 2 of the appeal, the assessee has assailed disallowance of weighted deduction claimed in respect of expenditure on in-house research & development activities u/s. 35(2AB) of the Act. We find that similar disallowance was made by the Assessing Officer in assessment year 2011-12. The Tribunal decided this issue in favour of assessee by observing as under : "16. We have heard the rival contentions and perused the record. The issue before us is vis-à-vis weighted deduction claimed under section 35(2AB) of the Act. The assessee had recognized R&D facility, for which approval was given by DSIR. The assessee during the year under consideration had incurred expenditure of Rs. 15.05 crores (approx.), on which the assessee had claimed weighted deduction under section 35(2AB) of the Act. However, the said weighted deduction claimed under section 35(2AB) of the Act was curtailed by Assessing Officer by Rs. 18,42,000/- on the ground that DSIR had not approved the expenditure. The issue which arises is whether under the provisions of the Act, DSIR had any authorit....
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....hority, then there shall be allowed deduction of expenditure incurred whether 100%, 150% or 200% as prescribed from time to time. Clause (2) to section 35 of the Act provides that no deduction shall be allowed in respect of expenditure mentioned in clause (1) under any provisions of the Act. Clause (3) further lays down that no company shall be entitled for deduction under clause (1) unless it enters into agreement with prescribed authority for cooperation in such R & D facility. The Finance Act, 2015 w.e.f. 01.04.2016 has substituted and provided that facility has to fulfill such condition with regard to maintenance of accounts and audit thereof and for audit of accounts maintained for that facility. 40. Under Rule 6 of Income Tax Rules, 1962 (in short "the Rules), the prescribed authority for expenditure on scientific research under various subclauses has been identified. As per Rule 6(1B) of the Rules for the purpose of sub-section 2AB of section 35 of the Act, the prescribed authority shall be the Secretary, Department of Scientific and Industrial Research i.e. DSIR. Under sub-rule (4), application for obtaining approval under section 35(2AB) of the Act is to be made i....
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.... the prescribed authority, can the deduction be denied to the assessee under section 35(2AB) of the Act for non issue of form No.3CL by the said prescribed authority or the power is with the Assessing Officer to look into the nature of expenditure to be allowed as weighted deduction under section 35(2AB) of the Act. The first issue which arises is the recognition of facility by the prescribed authority as provided in section 35(2AB) of the Act. 43. The Hon‟ble High Court of Gujarat in CIT Vs. Claris Lifesciences Ltd. (2010) 326 ITR 251 (Guj) have held that weighted deduction is to be allowed under section 35(2AB) of the Act after the establishment of facility. However, section does not mention any cutoff date or particular date for eligibility to claim deduction. The Hon‟ble High Court held as under:- "8. The Tribunal has considered the submissions made on behalf of the assessee and took the view that section speaks of: (i) development of facility; (ii) incurring of expenditure by the assessee for development of such facility; (iii) approval of the facility by the prescribed authority, which is DSIR; and (iv) allowan....
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....) of the Act held that the condition precedent was the certificate from DSIR, but the date of certificate was not important, where the objective was to encourage research and development by the business enterprises in India. In the facts before the Hon‟ble High Court of Delhi, the assessee had approached DSIR vide application dated 10.01.2015. The DSIR vide letter dated 23.02.2006 granted recognition to in-house research and development facility of assessee. Further, vide letter dated 18.09.2006, DSIR granted approval for the expenses incurred by the company on inhouse research and development facility in the prescribed form No.3CM. The Assessing Officer in that case refused to accord the benefit of aforesaid provision on the ground that recognition and approval was given by DSIR in the next assessment year. The Tribunal allowed the claim of assessee relying on the decision of the Hon‟ble High Court of Gujarat in CIT Vs. Claris Lifesciences Ltd. (supra). The Hon‟ble High Court of Delhi taking note of the decision of the Hon‟ble High Court of Gujarat observed that it has been held that cutoff date mentioned in the certificate issued by DSIR would be of no rel....