TaxTMI 
TaxTMI 
2022 (8) TMI 18
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....nce amounting to Rs. 75,20,908/-, Rs. 1,08,08,964/- and 9,15,39,570/-; case wise, respectively. 3. Learned counsel representing assessee submits at the outset that his sole substantive argument is that both the lower authorities have wrongly computed the impugned disallowance thereby taking into consideration assessee's entire investments than only those yielding exempt income(s) in the corresponding assessment year. He quotes Special Bench Order in ACIT Vs. Vireet Investments (P) Ltd. Vs. ACIT (2017) 165 ITD 27 (Del) (SB) and ACB India Ltd. Vs. CIT (2015) 374 ITR 108 (Del) in assessee's favour. 4. The Revenue has placed strong reliance on the lower authorities' action making this impugned disallowance. 5. We have given thoughtful consideration to the foregoing contentions and find merit in asssessee's arguments. We note with able assistance coming from both the parties that not only foregoing case-law supports the assessee's plea seeking to re-compute the disallowance in issue in light of only the dividend yielding investments but also learned co-ordinate bench order in its own case I.T.A No. 1229/PUN/2017 decided on 21-01-2020 has issued the very directions to the assess....
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....erated the submissions made before the Assessing Officer and CIT(A) and further submitted that the issue is squarely covered in assessee‟s favour by the decision of Co-ordinate Bench of Pune in assessee‟s own case for A.Y. 2012-13. He also placed on record the copy of the order of Tribunal for A.Y. 2012-13 and submitted that the facts are identical to that of A.Y. 2012-13 and therefore following A.Y. 2012-13, the ground be decided in assessee‟s favour. 15. The ld. DR on the other hand supported the orders of Assessing Officer and CIT(A). 16. We have heard the rival submissions and perused the material on record. The issue in the ground Nos.2.1 to 2.6 is with respect to disallowance of weighted deduction u/s 35(2AB) of the Act. We find that Pune Tribunal in ITA No.805/PUN/2017, order dated 04.09.2019 for A.Y. 2012-13 on identical facts in assessee‟s own case has decided the issue in assessee‟s favour by observing as under:- "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 fi....
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....al or continuation thereto. Before granting the approval, the prescribed authority has to satisfy itself about the genuineness of activities and make enquiries in this regard. Under sub-section (2B) to section 35 of the Act, a company engaged in the specified business as laid there on, if it incurs expenditure on scientific research or in-house Research & Development facility also needs to be approved by the prescribed authority, is entitled to deduction, provided the same is approved by the prescribed authority. 39. Now, coming to sub-section (2AA) to section 35 of the Act, it talks about granting of approval by the prescribed authority but the approval to the expenditure being incurred is missing under the said section. Similar is the position in subsection (2A). Further in subsection (2AB), it is provided that facility has to be approved by the prescribed authority, 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 ....
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....nd eligible for weighted deduction under sub-section 2AB of section 35 of the Act in part B of form No.3CL. In other words the quantification of expenditure has been prescribed vide IT (Tenth Amendment) Rules, 2016 w.e.f. 01.07.2016. Prior to this amendment, no such power was with DSIR i.e. after approval of facility. 41. Under the amended provisions, beside maintaining separate accounts of R & D facility, copy of audited accounts have to be submitted to the prescribed authority. These amendments to rules 6 and 7a are w.e.f. 01.07.2016 i.e. under the amended rules, the prescribed authority as in part A give approval of the facility and in part B quantify the expenditure eligible for deduction under section 35(2AB) of the Act. 42. The issue which is raised before us relates to pre-amended provisions and question is where the facility has been approved by 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.....
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....is stated to be promoted was development of facility, intention of the legislature by making above amendment is very clear that the entire expenditure incurred by the assessee on development of facility, if approved, has to be allowed for the purpose of weighted deduction. 10. We are in full agreement with the reasoning given by the Tribunal and we are of the view that there is no scope for any other interpretation and since the approval is granted during the previous year relevant to the assessment year in question, we are of the view that the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under s. 35(2AB) of the Act by the assessee." 44. The Hon'ble High Court of Delhi in CIT Vs. Sandan Vikas (India) Ltd. (2011) 335 ITR 117 (Del) on similar issue of weighted deduction under section 35(2AB) 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....
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.... has only approved part of expenditure in form No.3CL. We find no merit in the said order of authorities below. 46. The Courts have held that for deduction under section 35(2AB) of the Act, first step was the recognition of facility by the prescribed authority and entering an agreement between the facility and the prescribed authority. Once such an agreement has been executed, under which recognition has been given to the facility, then thereafter the role of Assessing Officer is to look into and allow the expenditure incurred on inhouse R&D facility as weighted deduction under section 35(2AB) of the Act. Accordingly, we hold so. Thus, we reverse the order of Assessing Officer in curtailing the deduction claimed under section 35(2AB) of the Act by Rs.6,75,000/-. Thus, grounds of appeal No.10.1, 10.2 and 10.3 are allowed." 18. The issue arising before us is similar to the issue in Cummins India Ltd. Vs. DCIT (supra) and following the same parity of reasoning, we hold that where facility has been recognized by the prescribed authority and agreement has been entered into between facility and the prescribed authority and thereafter the role of Assessing Officer is to look into....