TaxTMI 
TaxTMI 
2025 (8) TMI 127
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....Act, 1961 [hereinafter referred to as 'the Act'] whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 07/12/2017, passed under Section 143(3) of the Act for the Assessment Year 2015-2016. 2. The Assessee has raised following grounds of appeal : "1. Erred in not allowing a deduction for professional fees of Rs. 12,00,000/- paid to consultant Dilip Ravatkar by holding that the same was in connection with Research and Development Centre of the appellant and since it was not claimed as a weighted deduction u/s.35(2AB) the same could not be allowed u/s.37(1). 2. Erred in not allowing a deduction of Rs. 14,00,000/- paid to Offshore Planning Services P. Ltd. by holding that the same was in c....
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....e grounds raised by the Assessee challenging the above disallowances while disposing off the appeal vide order, dated 19/07/2024. Being aggrieved, the Assessee has preferred the present appeal on the grounds reproduced in paragraph 2 above. 4. We have heard both the sides and have perused the material on record. Ground No. 1 & 2 5. We would first take up disallowance of deduction claimed under Section 37(1) of the Act. 5.1. On perusal of the Assessment Order we find that that during the assessment proceedings, the Assessing Officer noted that the Assessee had debited INR. 26,00,000/- to the Profit & Loss Account for the relevant previous year as legal and professional expenses. The Assessing Officer was of the view that the s....
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....eduction under Section 35(2AB) of the Act in respect of expenditure incurred on research and development activity in respect of R&D Project and was maintaining separate books of accounts for the same. The Consultant was hired for R&D Project. Therefore, the expenditure incurred in respect of the same should have been debited to separate books of accounts maintained in respect of R&D Project and should have claimed deduction under Section 35(2AB) of the Act. The aforesaid expenditure could not be said to have been incurred wholly and exclusively for the purpose of the business of the Assessee. Therefore, deduction of INR. 12,00,000/- claimed by the Assessee under Section 37(1) of the Act in respect of payment made to the Consultant was disal....
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....the same. Thus, disallowance of INR. 12,00,000/- made by the Assessing Officer is deleted and Ground No.1 raised by the Assessee is allowed. 5.7. On perusal of the engagement agreement, dated 30/04/2014, we find that OPS was required to provide management advisory for obtaining approval for the R&D Unit. The advisory was clearly related to the setting up of R&D Unit and not an expenditure on in-house research. During the course of hearing reliance was placed on behalf of the Assessee on the written submission, dated 29/01/2021, filed before the Tribunal wherein a different stand has been taken by the Assessee. It has been contended that the expenditure was incurred for enhancing the efficient of the existing business. However, there is n....
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....hat the payments were made to OPS for setting-up R&D Centre. We note that Section 35(2AB) of the Act also excluded from its scope the expenditure in the nature of cost of land and building. Therefore, accepting the plea of the Assessee, we direct the Assessing Officer to treat the expenditure of INR. 14,00,000/- as part of cost of building and allow deprecation accordingly. Ground No. 3 6. Ground No.3 raised by the Assessee pertains to disallowance of deduction of INR. 1,11,445/- claimed by the Assessee under Section 35(2AB) of the Act. 7. On perusal of record we find that the Assessee had contended before the authorities below that INR. 1,11,145/- represented air fare and related expenses incurred for the purpose of a visit to Ita....