TaxTMI 
TaxTMI 
2024 (1) TMI 993
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....certain items in computation of book profits u/s 115JB of the Act. 2. That the assessment order u/s 143(3) of the Act dated 27^th December, 2017 passed by the Ld. AO and order of the Ld. CIT(A) dated 31^st May, 2019 u/s 250(6) of the Act are bad in law. The additions/disallowances made by Ld. AO and subsequently upheld by Ld. CIT(A) are wholly illegal, untenable and erroneous. 3. Disallowance of weighted deduction u/s 35(2AB) 3.1 The Ld. CIT(A) has erred in law and in facts and in the circumstances of the appellant's case in upholding the disallowance of weighted deduction u/s 35(2AB) of the Act made by the Ld. AO to the extent of 6,17,97,008/-, being the amount short approved by Department of scientific and industrial research (DSIR) mainly on account of delay in filing of Form No. 3CK. 3.2 The Ld. CIT(A) has failed to appreciate that above disallowance couldn't have been made by Ld. AO as delay in filing Form no.3CK is not attributable to the appellant. 3.3 The Ld. CIT (A) has erred in law and facts of the case, in not appreciating that no disallowance could have been made u/s 35(2AB) of the Act read with Rule 6(7A) as the exta....
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....st u/s 234C and 234D of the Act on wholly illegal and untenable grounds. • The above grounds are without prejudice to each other. • The Appellant craves leave to alter, amend or withdraw all or any of the grounds herein or add any further grounds as may be considered necessary either before or during the hearing. • The appellant prays that the appeal be allowed." 3. Facts giving rise to the present appeal are that the assessee company was engaged in the business of manufacturing of nylon tyre cord fabrics, packaging film, chemicals, engineering plastics and refrigerant gases. The original return of income declaring total income of INR 94,05,32,950/- was filed after claiming deduction under Chapter VI-A of INR 1,98,87,500/- and book profit of INR 3,81,66,29,461/- on 30.11.2015. Thereafter, the return of income was revised and declared total income of INR 105,07,73,790/-. The case was selected for scrutiny assessment and a notice u/s 143(2) of the Income Tax Act, 1961 ("the Act") was issued and served upon the assessee. In response to the statutory notices, Ld. Authorized Representative ("AR") of the assessee attended the proceedings and furn....
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.... but law has not intended that claim of deduction should be allowed on the basis of approval by DSIR. He further contended that law has been now amended the condition or requirement of obtaining approval from DSIR is inserted w.e.f 01.07.2016 by amendment made in Rule 6(7A)(b) of Rules. However, such provision cannot override the main Act. In support of this proposition, Ld. Counsel for the assessee relied upon various case laws:- a) "ACIT vs. Crompton Greaves Ltd. ([2019] 111 taxmann.com 338 (Mumbai-Trib.)) (P. no. 197-213 of Case Law Compilation); b) CIT vs. Claris Lifesciences Ltd. ([2008] 174 Taxman 113 (Gujarat)) (P. no. 238-241 of Case Law Compilation); c) CIT-III vs. Sandan Vikas (India) Ltd. ([2012] 22 taxmann.com 19 (Delhi)) (P. no. 242-245 of Case Law Compilation); d) Maruti Suzuki India Ltd. vs. Union of India ([2017] 84 taxmann.com 45 (Delhi)) (P. no. 246-262 of Case Law Compilation); e) Cummins India Ltd. ([2018] 96 taxmann.com 576 (Pune-Trib.)) (P. no. 263-286 of Case Law Compilation); f) Crest Composites & Plastics Pvt. Ltd. (ITA No. 28/Ahd/2017) (P. no. 287-295 of Case Law Compilation); g) Force Motors L....
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....ese evidences does not help the appellant when the preconditions for allowability of expense is expressly mentioned in the Act itself then where is the question of debate on this issue on this point. The Ld. AR relied upon certain case laws. I have perused these decisions. In the case laws relied upon by the Ld. AR, the judicial authorities had delivered on different facts and circumstances. These decisions are not applicable in the facts of the case of the appellant. 9.3 As per section 35(2AB) of the Act such expenditure on Research & Development facility should be approved by the prescribed authority [in this case Secretary, DSIR], is a pre-condition to be fulfilled by the assessee before being allowed weighted deduction. The reason for short approval by DSIR is not relevant as the authority for this approval lies with DSIR and the amount which has been approved by DSIR has already been allowed at the time of assessment proceeding. The appellant claimed deduction in its ITR u/s 35(2AB) of Rs. 52,62,21,008/-. The deduction as approved by the prescribed authority (DSIR) as submitted by the assessee on 06.11.2017 was Rs. 46,44,24,000/-. The assessee has claimed excess deduc....
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....n the list of the Eleventh Schedule]] incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of "[a sum equal to "[one and one-half] times of the expenditure] so incurred: Provided that where such expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility is incurred in a previous year relevant to the assessment year beginning on or after the 1^st day of April, 2021, the deduction under this clause shall be equal to the expenditure so incurred.] "[Explanation. For the purposes of this clause, "expenditure on scientific research", in relation to drugs and pharmaceuticals, shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority under any Central, State or Provincial Act and filing an application for a patent under the Patents Act, 1970 (39 of 1970).] (2) No deduction shall be allowed in respect of the expenditure mentioned in clau....
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....d by the assessee is not pressed. 15. Ground No.8 raised by the assessee is against the initiation of penalty proceedings which is pre-mature hence, dismissed. 16. Ground No.9 raised by the assessee is against the charging of interest u/s 234C & 234D of the Act, is consequential in nature, needs no separate adjudication, hence dismissed. 17. Ground Nos.4 & 6 raised by the assessee are inter-connected and raised against disallowance of depreciation on goodwill of INR 19,15,183/- under normal provisions. 18. At the outset, Ld. Counsel for the assessee submitted that the issue is squarely covered by the decision of Co-ordinate Bench of the Tribunal in assessee's own case. Ld. Counsel for the assessee contended that the assessee company recognized goodwill of INR 3,68,94,006/- on account of purchase of three (03) businesses in 2008 for consideration of INR 150,31,26,228/- as slump sale from SRF Polymers Ltd. and paid in excess of value of assets acquired of INR 146,62,32,222/- with respect of three (03) businesses. The assessee has claimed Goodwill of INR 19,15,183/- for the period under appeal. The assessee duly submitted the requisite facts and evidences during the course....
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.... made for the first time before CIT(A), we have herein above at para 34 & 35 have held that CIT(A) was not justified in not deciding the claim made by the assessee for the first time before him and CIT(A) should have decided the claim of the assessee. That apart, we find that the issue of goodwill also arose in the case of the assessee in A.Y. 2014-15 and 2012-13. We find that Co-ordinate Bench of Tribunal while deciding the issue for A.Y. 2014-15 (ITA No.6620/Del/2018 order dated 13.12.2021) by following the order of the Tribunal for A.Y. 2012-13 has decided the issue in favour of the assessee by observing as under: "36. During the course of assessment proceedings, it was noticed that assessee had claimed depreciation on goodwill amounting to Rs 25,53,577/-. It was submitted that assessee had purchased three business namely Industrial Yarn Business at Manali (Tamilnadu), Engineering Plastic business at Manali (Tamilnadu) and Engineering Plastic business at Pantnagar (Uttrakhand) for a consideration of Rs. 150,31,26,228/- as slump sale on 31st December 2008. It was submitted that the businesses was purchased from M/s SRF Polymers Limited on lump sum basis and the amount of....
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....e matter was set aside to AO for examination. In the year under consideration, he submitted that it is not a case wherein an additional claim has been made and therefore following the decision of Hon'ble Apex Court in the case of Smifs Securities Ltd. (supra), the claim of the assessee be allowed. 39. Learned DR on the other hand took us to the findings of the AO and DRP and pointing to their findings submitted that the AO was fully justified in denying the claim of depreciation. 40. We have heard the rival submissions and perused the material available on record. The issue in the present ground is with respect to the claim of depreciation on goodwill. We find that issue of depreciation on goodwill also arose in assessee's own case in A.Y. 2012-13 and the Co-ordinate Bench of Tribunal in ITA No.5784/Del/2016 order dated 24.04.2020 by relying on the decision of Hon'ble Apex Court in the case of Smifs Securities Ltd. (supra), held that assessee is eligible to claim depreciation on goodwill. However in that order since the claim of depreciation was made as an additional claim before the Tribunal, the matter was remitted to the AO for examination. In the year under co....
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....ill as claimed by the assessee. Therefore, Ground Nos. 4 & 6 raised by the assessee are allowed. 22. Ground Nos. 5 to 5.2 raised by the assessee are in respect of non- allowance of claim of additional depreciation @ 10% amounting to INR 29,51,16,062/- made during assessment proceedings. 23. Ld. Counsel for the assessee submitted that the assessee had made this claim with respect to additional depreciation of INR 29,51,16,052/- during the assessment proceedings. The AO did not discuss this claim and Ld.CIT(A) also did not entertain the claim. Reliance is placed upon the judgement of Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs CIT [200] 157 taxman-1 (SC). He submitted that the issue is fully covered by the orders of the Tribunal in assessee's own case in different years and remitted the issue back to the file of AO. It is pointed out by the Ld. Counsel for the assessee that the AO passed order giving appeal effect for providing balance additional depreciation in assessee's own case for AY 2014-15 and AO also quantified amount of additional depreciation for the year under appeal. 24. On the other hand, Ld. CIT Dr relied on the orders of lower authorities. 2....