TaxTMI 
TaxTMI 
2020 (2) TMI 654
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....et Income (as per computation) 27,25,782/- Add: As per Para 4 12,02,30,945/- As per Para 5 7,71,422/- Claim of deduction u/s 35(2AB) 2,07,29,524/- Research exp. Not added earlier 8,03,29,115/- 22,20,61,006/- Total Income 22,47,86,788/- Less: Deduction u/s 35(2AB) 18,13,87,754/- Total Income 4,33,99,034/- 3. During the course of assessment proceedings, the AO issued a questionnaire asking for details of 20 items. Referring to item No.16 relates to "Please furnish details of deductions claimed u/s 35, 35(2AA) and 35(2AB) along with the relevant documents of ministry of scientific and research." In response to the same, the assessee communicated the reply informing about the details of R&D facilities, details of expenditure incurred at page 53 in para 16. The same is extracted as under:- "16. Our company is an In-house Research and Development Company duly approved by the Department of Science & Industrial Research (DSIR), Govt. of India, New Delhi. Copy of the approval issued by the Department of Scientific & Industrial Research (DSIR), Govt. of India, New....
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.... and submissions of the assessee and also for necessary verification in the light of the observations made above, after affording proper opportunity to the assessee." 5. Aggrieved with the above adverse revision order of Pr.CIT, the assessee is in appeal before us for both assessment years 2013-14 and 2014-15. The grounds for A.Y. 2013-14 are extracted as under and the same are taken as lead case: Ground No.1 The learned Pr. CIT erred in passing the order u/s 263 of the Income tax Act & also erred in treating the AO's order as both erroneous & prejudicial to the interest of revenue. Ground No.2 The learned Pr.CIT erred in disallowing weighted deduction u/s 35(2AB). Proceedings before the Tribunal: 6. Before us, ld. Counsel Shri N.R. Agrawal accompanied by Shri Vijay Saboo submitted the background facts relating to Form Nos.3CM and 3CL tracing the evolution and the developments over the period from A.Y. 2008-09 to 2010-11. The ld. Counsel mentioned the assessee never filed requisite Form Nos.3CM and 3CL to the Department. However, the assessee got the relief from the Tribunal despite absence of Form No.3CM. Referring to the developments in A.Y. 2011-12, ld....
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....re to examine the correctness of expenditure, genuineness and bonafide in allowability of the deduction claimed u/s 35(2AB) of the Act. He also mentioned it is clear case where Form No.3CL is not in existence at all and therefore, rules are not honoured by the assessee. The assessee failed to file audited statements to the DSIR, which is required under the provisions of Rule 6 of Income-tax Rules, 1962. Decision of the Tribunal: 8. We heard both the parties and perused revised order of Pr.CIT and fresh assessment order made by AO u/s 263 r.w.s. 143(3) of the Act, Tribunal's orders placed before us (supra), judgment of Hon'ble High Court of Gujarat in the case of CIT Vs. Sun Pharmaceutical Industries Ltd. (supra). On perusal of the said orders of the Tribunal not only in assessee's own case and others, we find the failure to file Form No.3CL to the authority does not make orders erroneous. The claim is very much allowable provided the expenditure portion is examined and found allowable under the said provisions. In any case, such expenditure can also be allowable u/s 37 of the Act, provided the conditions are met. Further, we also examined the judgment of Hon'ble High Co....
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....isputedly, the research and development facility set up by the assessee was approved by the prescribed authority and necessary approval was granted in the prescribed format. The communication in Form 3CM was thereafter, between the prescribed authority and the department. If the same was not so, surely, the assessee cannot be made to suffer. To this extent, the Tribunal was perfectly correct and the Commissioner was not, in observing that in absence of such certification, claim of deduction under section 35(2AB) was not allowable. However, neither the prescribed authority nor the Assessing Officer has applied the mind as to the expenditure, be it revenue or or capital in nature, actually incurred in developing the inhouse research and HC-NIC Page 3 of 4 Created On Tue Aug 22 03:39:27 IST 2017 O/TAXAP/541/2017 ORDER development facility. To the limited extent, the Commissioner desired the Assessing Officer to verify such figures, we would allow the Assessing Officer to do so. In other words, in principle, we accept the Tribunal's reasons and conclusions. Merely because the prescribed authority failed to send intimation in Form 3CL, would not be reason enough to deprive ....