TaxTMI 
TaxTMI 
2021 (1) TMI 1342
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....However, the appeal was not filed within the above said date for the reason that the matter was not followed up by the Finance Manager with the management and the consultant. Later, the Finance Manager put in his resignation and the proceedings were left unattended. On further analysis of pending legal proceedings during March 2020 for the purpose of statutory audit for the financial year 2019-2020, management found out that the appeal has not been filed within the time and approached the Chartered Accountant for filing the appeal. Due to Covid-19 Pandemic, the process of filing the appeal took some more time. Therefore, it was prayed that the Tribunal may be pleased to condone the delay. 2.1 The learned Departmental Representative present was duly heard. 2.3 We have heard the rival submissions and perused the reasons stated for the belated filing of this appeal. The delay in filing of this appeal was on account of the then Finance Manager not following the issue with the Consultant. Later, the Finance Manager had resigned and the matter was left unattended. There are affidavits to the effect from both the earlier Manager and the present Manager of the assessee. The managemen....
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....63,251, however, DSIR allowed expenses to the extent of Rs. 2,74,51,209 in Form No.3CL. The assessment was taken up for scrutiny by issuance of notice u/s 143(2) of the I.T.Act and the scrutiny assessment was completed vide order dated 20.12.2018 u/s 143(3) of the I.T.Act, wherein the Assessing Officer based on Form No.3CL, added back a sum of Rs. 43,12,042 to the income of the assessee. The relevant finding of the Assessing Officer reads as follow:- "5. On verification of the revised financial statements furnished by assessee, it was found that during the financial year under consideration i.e.2015-16, the assessee has claimed Research and Development Expenses which are revenue in nature of Rs. 317.63 lakhs and Capital Expenditure on Scientific Research and Development of Rs. 27.33 lakh. However on going through Form 3CL it is seen that DSIR has allowed an amount of Rs. 275.51 lakhs w.r.t revenue expenditure and Rs. 27.34 lakhs w.r.t. Capital Expenditure respectively. Accordingly, an amount of Rs. 275.51 lakhs and Rs. 27.34 lakhs is considered for deduction u/s 35(2AB). Hence, the deduction claimed is restricted to the above sums as reflected in the Form 3CL. Details ....
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....udicial pronouncements. The Assessee's apparent argument is that, it was entitled to deduction of claim u/s 35(2AB) in respect of entire expenditures debited to the R&D account, whether carried out in-house or outside the premises. This stand of the appellant is not tenable. If this plea of the appellant was to be accepted there would be no need in the first place, to involve the DSIR in the process of approval. The certification required from DSIR, forms a crucial conditionality for staking a genuine claim u/s 35(2AB). This essential condition u/s 35(2AB), is only based on the premise that, DSIR is the only 'Technically- equipped Body' which can ascertain and certify the authenticity of a R&D claim; a domain which cannot be entered by a financial entity as the *I.T. Authority. The requirement of Form- 3CL therefore is the cornerstone for making the requisite claim of R&D expenditure - before the Income Tax Authority. By extension of the same logic, it cannot be the Assessee's case, that, the assessing authority could independently and freely examine and certify the genuine-ness of R&D claim made in respect of the research-activity carried on, outside the in-house R....
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....e's grounds of appeal are therefore disallowed." 6. Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal. The learned Counsel for the assessee has filed a paper book enclosing therein synopsis of submissions, statement of total income and financial statements for the year ended 31st March, 2016, Renewal of recognition of in-house R & D Unit dated 1st April, 2011, Form No.3CL dated 14.05.2018 and the judicial pronouncements relied on. The brief of the written submission is essentially the reiteration of the contentions made before the Income Tax Authorities. Further it was submitted that the issue in question is squarely covered by the orders of the Tribunal in the case of M/s.Mahindra Electric Mobility Ltd. v. ACIT [ITA No.641/Bang/2017 - order dated 14.09.2018] and M/s.Indfrg Limited. V. ACIT [ITA No.98/Bang/2015 - order dated 30.07.2020]. 7. The learned Departmental Representative, apart from relying on the order of the Income Tax Authorities, submitted that the amendment to Rule 6(7A) of the I.T.Rules by Finance Act, 2016 with effect from 01.07.2016 is only procedural and the same is applicable to the relevant assessment year. ....
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....d that the deduction u/s 35(2AB) of the I.T.Act was allowable year after year only after approval by DSIR in Form 3CL. The Rule 6(7A) of the I.T.Rules, 1962 was amended by the Finance Act, 2016 with effect from 01.07.2016, wherein it provided that prescribed authority has to furnish electronically its report (i) in relation to approval of in-house R & D facility in Part A of Form No.3CL, and (ii) quantifying the expenditure incurred in in-house R & D facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the I.T.Act in Part B of Form No.3CL. In other words, the quantification of expenditure has been prescribed vide IT (Tenth Amendment) Rules, 2016 with effect from 01.07.2016 only. Prior to this amendment, no such power was with DSIR. The Bangalore Bench of the Tribunal in the case of M/s.Mahindra Electric Mobility Ltd. v. ACIT [ITA No.641/Bang/2017 - order dated 14.09.2018] had held that prior to 01.07.2016 Form No.3CL has no legal sanctity and it is only w.e.f. 01.07.2016 with the amendment to Rule 6(7A)(b) of the I.T.Rules that the quantification of the weighted deduction u/s 35(2AB) of the I.T.Act has signifi....
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....f M/s.Indfrag Limited v. ACIT (supra), we noticed that Form No.3CL was issued only on 25.01.2017 (refer para 7 of the order). 8.4 The Ahmedabad Bench of the Tribunal in the case of M/s.Sun Pharmaceutical Industries Ltd. v. Pri.CIT, reported in (2017) 162 ITD 484 (Ahmedabad Trib.) had held that Form No.3CL is merely a report in the form of an intimation regarding approval of in-house R & D facility to be sent from prescribed authority to the Department and once the facility is approved in Form No.3CL, the expenses incurred within the notified period have to be allowed u/s 35(2AB) of the I.T.Act. The said order of the Tribunal was affirmed by the Hon'ble Gujarat High Court in the case of CIT v. Sun Pharmaceutical Industries Ltd. reported in 250 Taxman 270 (Guj.). The Pune Bench of the Tribunal in the case of Cummins India Limited v. DCIT [ITA No.309/Pun/2014 - order dated 15.05.2018] had held that the action of the Assessing Officer curtailing the expenditure and consequent weighted deduction claim u/s 35(2AB) of the I.T.Act on the surmise that prescribed authority has only approved part of expenditure in Form No.3CL is not tenable in law. The relevant finding of the Pune Benc....