TaxTMI 
TaxTMI 
2025 (10) TMI 22
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....(A) erred in deleting the addition of Rs. 27,08,160/- u/s.36(1) (iii) without appreciating the fact that no acceptable justification for diversion of interest bearing funds to interest-free has been provided by the assessee" 3. On the facts & in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs. 20,67,440/- u/s.35(2AB) without appreciating the following facts: a. The conditions precedent for allowance of deduction u/s 35(2AB) are that a certificate has to be obtained from the 'prescribed authority' and the 'prescribed authority for giving approval is the 'Secretary, DSIR, Govt. of India. The assessee company submitted a certificate of renewal of recognition of in-house R&D units dated 05.03.2009 which was issued by the Scientist-G. Thus, the certificate was not issued by the prescribed authority ie by the Secretary DSIR, Govt. of India. b. At St. No. 9 of Terms & Conditions attached to the said recognition certificate issued by the Scientist dated 05.03.2009 it is clearly mentioned that the recognition is not meant to tax exemptions, quantum of tax concession etc. c. The assessee company....
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.... amounting to Rs. 6,17,35,000/-. The assessee has claimed that interest free loans and advances are given to sister concerns out of own funds, and therefore, no disallowance u/s 36(1)(iii) is called for. However, Ld. AO disallowed the interest presuming that the assessee has also taken loans on which it was paying interest, and therefore, provisions of section 36(1)(iii) were applicable. Ld. AO, therefore, disallowed the claim of interest of loans and advances to the extent of interest free funds provided to its sister concerns. Ld. CIT(A), however, deleted the addition vide order dated 26.03.2014. 6. At the outset, Ld. AR pointed out that this issue is covered by the orders of the co-ordinate benches in assessee's own case for AY 2007-08 in ITA No. 6931/Mum/2010, for AY 2006-07 in ITA No. 3313/Mum/2010 & for AY 2008-09 in ITA No. 8545/Mum/2011. It was, further, submitted that Ld. CIT(A) relying on the orders of co-ordinate benches for earlier years in assessee's own case had correctly deleted the addition. Ld. DR, on the other hand, has relied on the order of Ld. AO. 7. We have considered the rival submissions and perused the material available before us. It is seen that ....
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.... account of research and development expenses. A certificate dated 31.05.2007 issued by Scientist G of the Council of Scientific and Industrial Research (CSIR) was also submitted regarding renewal of recognition of in-house R&D units by the assessee. However, Ld. AO did not accept the certificate on the ground that the same had been issued by Scientist 'G' and not Secretary DSIR, who is the prescribed authority specified in the section. 10. Ld. CIT(A) relying on the decision of the co-ordinate bench in the case of Advance Enzyme Technologies Pvt. Ltd. V/s ACIT, Circle-1, Thane (2020) 183 ITD 50 (ITAT Mumbai) held that the assessee is entitled to deduction u/s 35(2AB) of the Act. 11. Aggrieved with the order of the Ld. CIT(A), the revenue is in appeal before us. During the course of reasoning, the assessee has filed a copy of a certificate dated 19.05.2010 (which is valid upto 2013). It has been contended by the Ld. AR that all the conditions of section 35(2AB) are satisfied, and therefore, the assessee is entitled to weighted deduction u/s 35(2AB) of the Act. Reliance has been placed by the Ld. AR on a decision of the co-ordinate bench in the case of ACIT Circle-1, Thane v/s ....
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....jarat) wherein it has been held that merely because the prescribed authority failed to send intimation inform 3CL to department, it would not be reason enough to deprive the assessee's claim of deduction. In the instant case, the main objection raised is that the certificate of recognition is signed by Scientist not by the Secretary of DSIR. In this connection, the Hon'ble Tribunal's attention is invited to the Tribunal's decision rendered in the case of ACIT Vs. Ferment Biotech Ltd. 45 taxmann.com 329 wherein it has been clearly held that whether order of approval had been signed by Secretary, DSIR or by any of the Nodal Officer on his behalf would not make any difference and in such a case claim for deduction u/s 35(2AB) could not be disallowed. In addition, for denying the benefits of section 35(2AB), the learned A.O. has also observed that" It is further seen from the terms and conditions of recognition of the certificate issued by Scientist-G dt. 05.03.2009 wherein the at Sr. no. 9 it is clearly mentioned that the recognition is not meant to tax exemptions, quantum of tax concession etc." In this regard, it has to be submitted that condition at Sr. No. 9 t....
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....by the assessee during appellate proceedings without giving opportunity to the Ld. AO to examine the same, and therefore, he vehemently argued for upholding the addition made u/s 69C of the Act. On the other hand, Ld. AR relied on the order of Ld. CIT(A). 17. We have heard the rival submissions. A copy of reconciliation statement along with ledger accounts of the parties concerned have also been placed before us. Ld. AR has stated that the assessee had submitted all these documents before Ld. AO as well as Ld. CIT(A). We find that Ld. CIT(A) has examined the ledger accounts and confirmations of the suppliers in detail and has passed a speaking order giving relief to the assessee. 18. With regard to the addition of Rs. 88,92,770/-, Ld. CIT(A) has given his findings as under : "9.1. The AO has made addition of Rs. 88,92,770/- u/s 69C of the Act holding the same to be bogus purchase as the notices issued u/s 133(6) of the Act were not replied to by the concerned creditors. As seen from the assessment order, the amount of Rs. 88,92,770/- is arising out of following creditor parties. SI Name of the creditor party Amount 1. Abhishek Electricals 8,76,95....
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....on of Rs. 6,15,332/- The appellant contends that balance as per creditor party is Rs. 7,49,097/- and thus there is a difference of Rs. 1,33,565/- (party showing more). The appellant contends that there was a difference in opening balance of Rs. -1435/- and payment of Rs. 1,35,000/- was debited by the appellant to the said party but not accounted for by the said creditor party. OME TAY DEPARTME The contention of the appellant seems to be valid and I am of the opinion that addition of Rs. 6,15,332/- in respect of M/S Linear Technologies cannot be sustained. In view of the facts and circumstances of the case, I hereby delete the addition of Rs. 88,92,770/- made by the AO u/s 69C of the Act." 19. As for addition of Rs. 3,90,400/- on account of positive difference in the balances, Ld. CIT(A) has observed as under: "As regards addition of Rs. 3,90,400/- on account of positive difference (party showing less), it is seen that, where the balance as per party is less than the balance as per appellant, there can not be any unexplained purchase. Unless the appellant has made some payment to those parties which are not recorded in the books of accounts of ....