TaxTMI 
TaxTMI 
2025 (6) TMI 38
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....O without considering the fact that the Ld. AO has accepted the claim of the assessee for deduction u/s 35(2AB) of the Income Tax Act, by making proper enquiry as well as by taking the form 3CL physically. 3. That the Ld. PCIT has erred in law as well on facts by invoking clause (a) of explanation 2 to section 263 of the Act despite the fact that proper enquiry of the matter has been conducted by the Ld. AO as well as without considering the rule of filing form 3CL that this form was to be filed by the department of Scientific and Industrial Research, not the assessee." (B) In this case, the assessment order dated 07.02.2020 was passed under section 143(3) r.w.s. 144C(3) of the Act. Subsequently, the Ld. PCIT passed the impugned order dated 21.03.2022, under section 263 of the Act, whereby the assessment order dated 07.02.2020 was set aside and the Assessing Officer was directed to pass assessment order, considering the issue raised in the notice under section 263 of the Act. The notice issued under section 263 of the Act Ld. PCIT dated 08.03.2022 is reproduced below for the ease of reference :- "The assessment records for the A.Y. 2016-17 have been called and ....
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.... Sd/- (Vimalendu Verma) PCIT (Central), Lucknow (B.1) In response, the assessee submitted as under: - "In this regard, Sir, it is humble submitted that during assessment Proceeding, vide notice no. ITBA/AST/F/142(1)/2019-20/1021228949(1) dt. 28.11.2019, the Assessing Officer had already asked to furnish the details of deduction claimed on the account of scientific research along with their documentary evidence (Enclosing the Notice Dt 28.11.2019 for your reference). Assessee Company has already submitted its reply against the above notice on Dated 02.12.2019. We are herewith reproducing the relevant para of our reply for claiming deduction under section 35(2AB): 6, Large deduction claimed u/s 35(2AA), 35(2AB), 35(CCC) & 35(CCD): Please furnish the details of deduction claimed on the account of scientific research along with their documentary evidence. Reply: - The assessee company is having an in house R & D centre which is approved from Department of Scientific and Industrial Research (DSIR). As per Section 35(2AB) of Income Tax Act, 1961, where manufacturing company incurs any expenditure on scientific research (not being expenditure i....
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....effective from 01.07.2016. Also, Form 3CL, in new format, should have been furnished electronically as per Rule 6(7A)(b) of the I.T. Rules, 1962. However, required evidences for it being furnished electronically have not been submitted by the assessee. (b) As per Rule 6(7A)(c) of the I.T. Rules, 1962, it is mandatory for the assessee to obtain the requisite audit report in form 3CLA and to furnish it electronically before the due date of filing the return of income. In the instance assessment year, report of the assessing officer concludes that such form 3CLA was not furnished either electronically or before the assessing officer during the course of the assessment proceedings. In view of this the assessee was not eligible for deduction under section 35(2AB) read with Rule 6 but the same has been allowed in the assessment order dated 07.02.2020. 7. Thus, during the course of the assessment proceedings, the Assessing Officer while making the assessment has not examined/ enquired into the details of the case and there is a clear error on application of section 35(2AB) of the I.T. Act, 1961 read with Rule 6 of the I.T. Rules, 1962. Therefore, the assessment ....
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.....2841/Del/2022 AY. 2018-19 ITAT Delhi 'C' Bench order dated 16.04.2023 32 Advance Engine Technologies Ltd vs ACIT Circle-1 ITA. No.866 & 3722/Mum/2017 order dated 04.03.2020 33 Form 3CLA w.e.f 01.07.2016 34 Hon'ble Allahabad High Court decision in case of M/s. ML Chains W.T. No.638 of 2022 order dt 16.08.2023 (B.4) The aforesaid paper book also contained written submissions which are reproduced below for the ease of reference: - "The Pr. CIT, (Central) has set aside the Assessment Order dated 07.02.2020 passed u/s 143(3) by invoking the provision sector 263 and directed to pass fresh order considering the issue raised in the notice u/s 263 of the LT. Act 1961, vide order dated 21.03.2022. The Pr.CIT (Central) has observed as under in para 6 and para 7 of the order u/s 263 at page 6 and 7. [Para 6] As per Rule 6(7A)(c) of the I.T. Rules, 1962, it is mandatory for the assessee to obtain the requisite audit report in form 3CLA and to furnish it electronically before the due date of filing the return of income. In the instance assessment year, report of the assessing officer concludes that such form 3CLA was not furnished e....
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....6 221 ITR 155: "In the first instance it was contended by learned Counsel for the assessee that the very premise on which order under section 263 was made against the assessee, namely, that the Income Tax Officer has not at all examined the goodwill account is not existent. According to him, it is apparent from the record that the goodwill account was thoroughly examined by the Income Tax Officer before making the assessment and after examining when he accepted the contention of the assessee its discussion did not find place in the assessment order, as no additions were going to be made or no modifications in the return filed by the assessee were required to be made in that regard. This connection of the assessee appears to be well-founded. It is true that the assessment order does not speak about the examination of goodwill account as such. However, as we have notice above the assessee in his reply to the show-cause notice under section 263 has specially mentioned that the entire matter was scrutinized and accepted while passing the assessment order." ---- "For an order of the Assessing Officer to be interfered with in exercise of revisional powers the C....
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....iry, is factually incorrect, the Ld. AR submitted. Inter alia, the Ld. AR relied upon the decisions in CIT vs. Max India Limited 295 ITR 282 (S.C.); CIT vs. Sunbeam Auto Limited 332 ITR 167 (Del.); CIT vs. Anil Kumar Sharma 335 ITR 83 (Del.); CIT vs. Vikas Polymers 236 CTR 476/194 Taxman 57; Hari Iron Trading Company vs. CIT, 263 ITR437 (P&H); Malabar Industrial Co. Ltd. vs.CIT,243 ITR 83(S.C.); CIT vs. Hindustan Coca-Cola Beverages (P) Ltd. 331 ITR 192 (Del.); CIT vs. International Travel House Lid. 194 Taxman 324; CIT vs. DLF Power Limited 329 ITR 289 (Del.); CIT vs. Eicher Limited 294 ITR 310 (Del.) CIT vs. Ashish Rajput, 320 ITR 674 (Del.); CIT vs. Rohit Anand, 327 ITR 445 (Del.); CIT vs. Gopal Purohit, 228 CTR 582 (Bom.); and CIT vs. PNB Finance and Industries Limited, 236 CTR 1 (Del.). " ----- (Emphasis supplied) In the present case filed detail reply before AO on 12 December, 2019 clearly stated in point no. 6. The caption in the I.T. Rules 1962 regarding form No. 3CL is as under: Form No. 3 CL Report to be submitted b the prescribed authority to the Income Tax Act Authority specified under sector 35(2AB) of the Income Tax Act, 1961. This is to be ....
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....ee has commenced its activities from 01.08.2012. Thereafter, the assessee has filed an application for recognition of NTRC vide letter dated 12.10.2012. The DSIR neither rejected the claim of application filed by the assessee nor communicated the position of application filed by the assessee at any time during the relevant period. The assessee has filed writ petition before the Hon'ble Delhi High Court and challenge the action of the competent authority i.e. the Secretary, DSIR, Ministry of Science and Technology, Govt. of India and the writ application filed by the assessee pending for adjudication. Be that as it may, but the undisputed facts are that the DSIR has issued recognition for all units vide its communication dated 15.01.2014 and such recognition was valid up to 31.03.2016, subsequently, the renewal of recognition was also granted up to 31.03.2019. Further, the assessee has claimed deduction u/s 35 (2AB) of the Act, from AY 2002-03 to 2008-09 and such claim has been accepted by the department for those years. In fact there is no dispute with regard to claim for AY 2014-15 onwards. The only dispute is with regard to the intervening period of AY 2009-10 to AY 2013-14, ....
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....he IT Act. Expect this, existence of R&D facility at three places and consequent expenditure incurred for relevant purpose are not disputed by the authorities. In fact, the A.O. as well as Ld. CIT (A) have categorically accepted that the assessee has set up R & D centres and incurred various expenditure for in house research and development purpose. In this legal and factual background, if you go through the claim of the assessee towards dedication claim u/s 35 (2AB) of the Act, we need to examine such claim made by the assessee is in accordance with provision of section 35 (2AB) of the IT Act, and relevant Rule 6 and 7A of the IT Rules, 1962. In order to claim the benefit of weighted deduction u/s 35 (2AB) of the Act, the assessee should fulfilled two conditions. First condition is there should in- house research and development. The competent authority for this purpose has been defined as the secretary, DSIR, Ministry of Science and Technology, Govt. of India, there is a prescribed procedure for approval of R&D facility. Rules 6 and 7A of the Income Tax Rules, 1962, provides for mechanism of filing an application and related approval by the competent authority. At the cost of rep....
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....n the case of CIT vs. Sun India Ltd. (supra) had once again considered on identical issue and held that once R&D facility set up by the assessee has been approved by the prescribed authority and necessary approval was granted in the prescribed format, then the communication in form 3CM was thereafter between the prescribed authority and the department. If the same was not so surely the assessee cannot be make to suffer. The Hon'ble Madras High Court in the case of CIT us TVS Electronics Ltd. (supra) had held that the assessee cannot be punished for the bureaucratic delay in given such approval for the year in question, which was in the hands of the department concerned of the Central Govt. itself. On the very fact that for the period anterior period and posterior to the year in question such approval was very well on the record of the Revenue, weighted deduction for the expenditure incurred on the scientific research could not have been disallowed by authority below. The sum and substance of ration laid down by the Hon'ble High Court are that once the assessee has been b the competent authority then subsequent renewal/ communication of such as approval in prescribed form is....
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....ale consideration. Justify that capital gain are proportionate to the sale consideration. Large other expenses claimed in profit and loss a/c: Furnish details on this observation alongwith copy of ledger account of expenses claimed under this head with proper justification. It can be seen that AO has asked for large deduction claimed w/s 35 (2AA), 35 (2AB), 35 (CCC) and 35 (CCD). Hence the observation of Pr. CIT that AO has not examined maintained in para 3 of notice the AO has not enquired into 35 (2AB) in factually incorrect. The assessee vide reply to DCIT central circle filed on 12th December, 2019 filed as under: With reference to your query No. 1, sir, it is humbly submitted that depreciation is a statutory allowance and the working of the same may be verified with schedule of depreciation as per Income Tax Act, attached along with Tax Audit Report of the assessee company. With reference to your query No. 2, sir, in this regard it is submitted that the matter of the company relates to the TPO for which the last date for filing ITR was 30.11.2016 and the ITR of the assessee has been filed on 28.11.2016 vide acknowledgement no. 545253661281116 and the....
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....e. Pr. CIT (Central) has expressed his own unique view which is out of the ambit of erroneous in so far as it is prejudicial to the interest of revenue. (Emphasis supplied) In the case of Infosys Technologies Ltd. vs JCIT vide order dated 02.06.2005. Hon'ble Bangalore ITAT stated as under: -- -"However, if necessary enquiry has been made and satisfaction of assessing officer has been arrived at, though not clearly mentioned in the assessment order, such order cannot be raised on the ground that the claim has been allowed without the provision of law. We once again mention that without pointing out error in assessment order, The CIT is not justified, in passing an order in revision directing the assessing officer to make further enquires. We according set aside the order of learned CIT for assessment year 1996-97" ---- (Emphasis supplied) In the notice under 263 the Pr. CIT, (Central) has mentioned in para 2 that approval of deduction in the prescribed proforma by the competent authority as per the provisions of section 35 (2AB) of IT Act, 1961, read with Rule 6 of IT Rule 1962 is not found on records. 1. It can be seen that proforma not found....
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....see drew our attention to written submissions [relevant portion of which has been already been reproduced in foregoing paragraph (B.4) of this order] and placed reliance on it. The Ld. DR supported the impugned order passed u/s 263 of the Act. (C.1) We have heard both sides. We have perused materials on record. It is found that the Assessing Officer passed assessment order dated 07.02.2020, allowing the assessee's claim u/s 35 the Act; which was revised by Ld. PCIT vide aforesaid impugned order u/s 263 of the Act. The contents of paper-book [referred to in foregoing paragraph (B.3) of this order] and written submissions from the assessee's side [relevant portion already reproduced in foregoing paragraph (B.4) of this order] clearly indicate that the assessee had provided all relevant details pertaining to claim u/s 35 of the Act, during assessment proceedings, in response to queries of the Assessing Officer. Therefore, it is not a case of no inquiry by the Assessing Officer. The Ld. PCIT has, however, taken adverse view in impugned order u/s 263 of the Act, taking recourse to amended Rule 6 of Income Tax Rules (amended w.e.f. 01.07.2016), read with section 35(2AB) of the....