TaxTMI 
TaxTMI 
2020 (12) TMI 679
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....as admitted by a bench of this Court vide order dated 13.06.2017 on the following substantial questions of law: Whether on the facts, in the circumstances and on the grounds and contentions urged: (i) the Tribunal was right in holding that expenses to the extent of Rs. 570,61,55,000/- incurred towards research and development is capital in nature? (ii) the Tribunal was correct in upholding the disallowance made under Section 14A of the Act? 3. I.T.A.No.468/2016 was admitted by a bench of this Court vide order dated 13.06.2017 on the following substantial question of law: Whether on the facts and in the circumstances of the case, the Tribunal was justified in directing the assessing officer to allow the claim of deduction under section 35(i)(iv) of the Income Tax Act, 1961 even though the assessee had not claimed the same in return of income and ignoring the principle laid down by Apex Court in case of Goetze (India) Ltd (reported in 284 ITR page 323(SC)) and also in the decision of this Hon'ble Court in case of BAe HAL Software Ltd in ITA NO.1336/2010 dated 1/3/2011? 4. Facts leading to filing of these appeals briefly stated are that th....
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.... counsel for the assessee submitted that the authorities under the Act ought to have appreciated that the expenses incurred on account of Research and Development expenses are revenue expenses and the same ought to have been allowed as deduction under Section 37 of the Act. It is also urged that the tribunal erred in placing reliance on the decision of the tribunal in the case of the assessee for Assessment Year 1995-96 and in holding that the grants received in the nature of capital receipts not chargeable to tax. It is also urged that the aforesaid order no where states that revenue expense incurred out of such grants would be allowable. It is also contended that nature of expenses are clearly revenue. In support of aforesaid submissions, reliance has been placed on decisions of the Supreme Court in 'EMPIRE JUTE CO. LTD. VS. CIT', (1980) 3 TAXMAN 69 (SC) and 'TAJ MAHAL HOTEL VS. COMMISSIONEROF INCOME-TAX', (1967) 66 ITR 303 (AP). 7. Alternatively it is submitted that alternatively if the expenses are held to be capital expenditure, then in terms of Section 35(1)(iv) of the Act, the same would be allowable as a deduction since, it is incurred on scientific resea....
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....counsel for the revenue submitted that the assessee in his submission made before the Assessing Officer on 14.11.2002 has clearly admitted that expenditure incurred result in acquisition of capital asset and therefore, the tribunal on the basis of admission made by assessee has rightly held that the expenditure incurred by the assessee is capital in nature. It is also argued that if any expenditure incurred results in any acquisition of the asset, the same would constitute capital expenditure. It is urged that the assessee had claimed dividend of Rs. 62.18 Lakhs exempt under Section 10(34) of the Act. However, the assessee claimed that it had incurred no expenditure in earning the dividend income. Therefore, the Assessing Officer rightly invoked Rule 8D(iii) of the Rules and disallowed a sum of Rs. 15,80,810/- and the Commissioner of Income Tax (Appeals) as well as the tribunal has affirmed the same. It is also submitted that in view of decision of the Supreme Court in 'MAXOPP INVESTMENT LTD. VS. CIT', (2018) 402 ITR 640, the Rule 8D of the Rules applies for the Assessment Year 2009-10 and the Assessing Officer has rightly invoked Rule 8D of the Rules to disallow the expend....
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.... case, the total research and development expenses incurred by the assessee was to the tune of Rs. 67,478.1 Lakhs, which includes expenses towards raw materials, direct expenses, salaries, interest, depreciation and other expenses. Out of the aforesaid amount, the Assessing Officer has disallowed a sum of Rs. 570.61 Lakhs on the ground that the same was made out of the grants given by Government of India. The expenses incurred by the assessee were towards research and development and therefore, the same were revenue in nature and ought to have been allowed as deduction under Section 37 of the Act. The fact that the expenses incurred by the assessee towards research and expenses have been met out of the grants given by the government, which is treated as capital receipt is immaterial. The Tribunal erred in placing reliance on the case of the assessee for Assessment Year 1995-96 as the Tribunal failed to appreciate the aforesaid order, as the order no where states that the revenue expenses incurred out of the grant would not be allowed as deduction under Section 37 of the Act. It is pertinent to mention here that the nature of the expenditure has to be seen and not the nature of rece....