TaxTMI 
TaxTMI 
2021 (3) TMI 710
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....ents necessary for compliance with the Act have been submitted with the DSIR. 2.0 That on the facts and in the circumstances of the case, the ld. CIT(Appeals) was not justified in admitting the additional ground raised in appellant proceedings without considering the judicial pronouncements and provision of the Act. 3.0 That on the facts and in the circumstances of the case, the ld. CIT(Appeals) is unjustified in not allowing the claim of education cess of Rs. 24,43,508/- as an allowable business expenditure. 4.0 That on the facts and in the circumstances of the case, the ld. CIT(Appeals) is unjustified in not treating Focus Product Script Rs. 14,81,465/- incentive received under Foreign Trade Policy as capital receipt not chargeable to tax by considering the purpose test." Deduction u/s 35(2AB): 3. Straight to the issue, the assessee claimed weighted deduction u/s 35(2AB) amounting to Rs. 1.21 Cr. The Assessing Officer held that in the absence of Form 3CL, such deduction is not allowable. 4. The ld. CIT (A) supported the contention of the Assessing Officer reiterating that in the absence of Form 3CL, the claim of the assessee cannot be quantifie....
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....of this letter. Yours faithfully, Sd/- (Dr. S. K. Deshpande) Scientist - 'G' 6. The expenditure incurred on R&D centre for the assessment year 2014-15 is as under: 7. Further, the assessment year 2016-17 the expenditure incurred on R&D centre is as under: 8. It was argued that the above expenditure for the assessment year 2014-15 and assessment year 2016-17 proves that the assessee is continuously engaged in the Research activity and the same has been renewed and approved by the DSIR as can be seen from the above approval letters. It was argued that the Form 3CL could not be submitted due to the fact that the CFO of the company has left the service and the document could not be traced. It was also submitted that Form 3CL has been submitted by the assessee on 26.12.2018 and 95% of the expenditure was allowed by the DGIT as allowed the expenses of 95%. The report submitted by the prescribed authority to the DGIT is as under: 9. The statement of expenditure claimed and allowed by the department in the Form 3CL is as under: 10. The ld. AR argued that having submitted all the details, the communication in Form 3CL was as per the rules is between the prescribed....
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....ispute regarding the expenditure incurred by the assessee. 17. with regard to the issue before hand, we have also gone through the judgment of Hon'ble High Court of Gujarat in the case of CIT Vs Sun Pharmaceutical Industries Ltd. where in it was held that "having heard learned counsel for the parties and having pursued the orders on record, we are broadly in agreement with the view of the Tribunal. Undisputedly, 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 3CL 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 available". 18. Similarly, the Tribunal in the case of Century Seeds Pvt. Ltd. Vs DCIT in ITA No. 942/Hyd./2017 dated 20.07.2018 held that AO has correctly allowed the deduction and there is no error in the order passed by AO u/s 143(3). Once a research facility is ....
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....ity of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, we do not see any reason why the assessee should be prevented from raising that question before the tribunal for the first time, so long as the relevant facts are on record in respect of that item. We do not see any reason to restrict the power of the Tribunal under Section 254 only to decide the grounds which arise from the order of the Commissioner of Income-tax (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. We fail to see why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. 6. In the case of Jute Corporation of India Ltd. v. C.I.T. this Court, while dealing with the powers of the Appellate Assistant Commissioner observed that an appellate authority has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if a....
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....cess paid on Income Tax doesn't come under the purview of the definition as it is levied on the amount of Income Tax but not on profits of business. The ld. AR relied on the Circular No. 91/58/66-ITJ(19) by CBDT dated 18.05.1967, which states the effect of the omission of the words 'cess' from Section 40(a)(ii) is that only taxes paid are to be disallowed in the assessment for the assessment years 196263 onwards. 27. The ld. AR also relied on the judgment of Hon'ble Rajasthan High Court in the case of Chambal Fertilisers and Chemicals Ltd. Vs JCIT in ITA No. 52/2018 dated 31.07.2018 wherein the same issue has been decided in favour of the assessee and particularly held that education cess is an allowable expenditure. 28. Further, he argued that in the case of ITC Vs ACIT in ITA No. 685/Kol/2014 dated 27.11.2018 wherein it was held that the education cess is an allowable expenditure. 29. The ld. AR has also relied in the case of Peerless General Finance & Investment Co. Ltd. Vs DCIT in ITA No.937 & 938/Kol/2018 dated 24.03.2019 wherein it was held that education cess is not tax and is an allowable expenditure. 30. The ld. DR argued that it is not the appropriate forum to....
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....sions of Sec. 115 of the Income Tax act 1961 which are as under: "Explanation 2 to section 115JB (2) of the Act defines the term 'Income-tax' in an inclusive manner, which includes cess. Provision of the explanation 2 to section 115JB is as given below:- For the purposes of clause (a) of Explanation 1, the amount of income-tax shall include- (i)any tax on distributed profits under section 115-O or on distributed income under section 115R; (ii) any interest charged under this Act; (iii) surcharge, if any, as levied by the Central Acts from time to time; (iv) Education Cess on income-tax, if any, as levied by the Central Acts from time to time; and (v) Secondary and Higher Education Cess on income-tax, if any, as levied by the Central Acts from time to time. 36. Thus, wherever the legislature wanted to include this term specifically in the statue it has done so under the Act. The term 'tax' has been defined in section 2(43) of the Act to include only Income-tax, Super Tax and Fringe Benefit Tax (FBT). Provision of the section 2(43) is as given below: "tax" in relation to the assessment year com....
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.... fee and the public authority which imposes it. If specific services are rendered to a specific area or to a specific class of persons or trade or business in any local area, and as a condition precedent for the said services or in return for them cess is levied against the said area or the said class of persons or trade or business the cess is distinguishable from a tax and is described as a fee. Tax recovered by public authority invariably goes into the consolidated fund which ultimately is utilised for all public purposes, whereas a cess levied by way of Fee is not intended to be, and does not become, a part of the consolidated fund. It is earmarked and set apart for the purpose of services for which it is levied." 40. We also find that the proceeds from collection of "Education Cess" are not credited to Consolidated Fund but to a non-lapsable Fund for elementary education-"Prarambhik Shiksha Kosh". Since the proceeds from collection of Education Cess are kept separate for a specified purpose, applying the principles in the aforesaid decision of Apex Court in the case of M/s Dewan Chand Builders (supra), it can be said that the same is not in the nature of tax. Hence, it is a....
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....Copco India Ltd. Vs ACIT in ITA No. 736/Pune/2011 • Tata Autocomp Hendrickson Vs DCIT in ITA No. 2486/Pune/2017 • Symantec Software India Pvt. Ltd. Vs DCIT in ITA No. 1824/Pune/2018 • Sicpa India Pvt. Ltd. Vs ACIT in ITA No. 704/Kol/2015 • Philips India Ltd. Vs ACIT in ITA No. 2612/Kol/2019 • ITC Limited Vs ACIT in ITA No. 685/Kol/2014 • DCIT Vs The Peerless General Finance & Investment & Co. Ltd. in ITA No. 1469/Kol/2019. • ACIT Vs ITC Infotech in ITA No. 220/Kol/2017 • Reckitt Benckiser India Pvt. Ltd. Vs DCIT (2020) 117 taxmann.com 519 (Kol.) • Crystal Crop. Protection Pvt. Ltd. Vs JCIT in ITA No. 1539/Del/2016 • Midland Credit Management India Vs ACIT in ITA No. 3892/Del/2017 • Voltas Ltd. Vs ACIT in ITA No. 6612/Mum/2018 • Sesa Goa Ltd. Vs JCIT (2020) 117 taxmann.com 96 (Bom.) • Chambal Fertilisers and Chemicals Vs JCIT in ITA No. 52 of 2018 (Raj. HC) 44. Hence, keeping in view the provisions of the Act pertaining to Section 40(a)(ii) and Section 115JB, Circular of the CBDT No. 91/58/66ITJ(19), the orders of....
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....ll be notified from time to time. Export of Products/Sectors of high export intensity/employment potential (which are not covered under present FPS List) would be incentivized at 2% of FOB value of exports (in free foreign exchange) under FPS when exported to the Linked Markets (countries), which are not covered in the present FMS list, as notified in Appendix 37D of HBPV, for exports made from 27.08.2009 onwards." 49. We have also examined the para no. 3.15.3 of the scheme document of the Foreign Trade Policy of Government of India, Ministry of Commerce and Industry wherein it was specified that market linked focus products scripts (MLFPS) is meant for export of products of high export intensity employment potential would be incentivized at 2% of FOB value of exports in free Foreign Exchange under FPS when exported to the linked market countries. 50. Thus, there is no dispute that this incentive is an export incentive. The matter has been well considered by the order of the Co-ordinate of ITAT Chennai in the case of Eastman Exports Global Clothing Pvt. Ltd. in ITA No. 47/MDS./2016 dated 17.05.2016. The order dealt with the similar issue of market linked focus produc....
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....ssee. The incentive given to the assessee is not for running the business profitably but for expanding the market area. Therefore, this Tribunal is of the considered opinion that the incentive given by the Government to the assessee for exploring the new market is a capital receipt, hence it cannot be treated as income either u/s 2(24) or 28 of the Act. In view of the above, we are unable to uphold the order of the lower authority. Accordingly, the orders of the lower authorities are set aside and the addition made by the Assessing Officer is deleted." 51. We have gone through the entire facts and preposition of the law and find that the issue is squarely covered by the said order of the Tribunal which was based on the judgment of the Hon'ble Apex Court. The MLFPS received by the assessed is to be treated as capital receipt only. Hence, we hereby allow the plea of the assessee on this ground. 52. In the result, the appeal of the assessee is allowed. Order Pronounced in the Open Court on 02/02/2021. ============= Document 1Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\direct_extract_text.py....
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....ately. The expenditure shall be claimed only if the utility is exclusively meant for the R&D centre or the consumption of the utility by R&D is metered and recorded. Document 3 HI/TEL 26962819, 26567373 (EPABX) 26565694, 26562133 26565687, 26562144 सूचना का 26562134, 26562122 अधिकार RIGHT TO H/FAX 26960629, 26529745 INFORMATION Website http:/www.dair.gov.in सतà¥à¤¯à¤®à¥‡à¤µ जयते आईà¤à¤¸à¤“ 9001:2008 पà¥à¤°à¤®à¤¾à¤£à¤¿à¤¤ विà¤à¤¾à¤—) à¤à¤¾à¤°à¤¤ सरकार विजà¥à¤žà¤¾à¤¨ और पà¥à¤°à¥Œà¤¦à¥à¤¯à¥‹à¤—िकी मंतà¥à¤°à¤¾à¤²à¤¯ वैजà¥à¤žà¤¾à¤¨à¤¿à¤• और औदà¥à¤¯à¥‹à¤—िक अनà¥à¤¸à¤‚धान विà¤à¤¾à¤—, टेकà¥à¤¨à¥‹à¤²à¥‰à¤œà¥€ à¤à....
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....7 10. Total cost of in-house research facility, giving break-up of expenditure on land and building: Description (Rs. In Lakhs) AY 2016-17 Capital Expenditure 9.79 (other than land & Building) 66.49 4 76,28 Revenue Expenditure Total R&D expenditure 11. Whether agreement for co-operation and Research and Development facility and for audit of the accounts maintained for that facility entered into. Yes Certified that the above information is true to the best of our knowledge and belief. (Indu Bhaskar) Scientist 'G' (For and on behalf of Secretary, DSIR) Place New Delhi Date: 14 December, 2017 DSIR Ref File No. TU/IV-15 (1455)/2016 Order in Form 3CM No. TU/IV-16 (1455)/35(2AB)/3CM/1178/2016 3CL No.TU/IV-15(1455)/35(2AB)/3CL/2916/2017 To: 1. The Chief Commissioner of Income Tax (Exemptions), Pratyaksh Kar Bhawan, Block E-2, 25th Floor, Civic Centre, J.L. Nehru Marg, New Delhi 110002. 2. The Chief Commissioner of Income Tax -2, Room No. 353, Central Revenue Building, I.P. Estate, New Delhi. 3. M/s Bharat Rasayan Limited, 1501, Vikram Tower, Rajendra Place, N. Delhi-110008. Document 5Traceback (most re....