TaxTMI 
TaxTMI 
2026 (5) TMI 1712
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....elay in the interest of substantial justice and admit the appeal of the assessee for adjudication. 3. The Ground Nos. 1, 2 and 3 raised by the assessee in Form No. 36 are challenging the validity of assumption of jurisdiction under section 147 of the Act. The Ground Nos. 4 and 5 raised by the assessee in Form No. 36 are challenging the confirmation of disallowance of Rs 22,12,031 made by the learned AO in the reassessment proceedings on account of depreciation figure included in R& D expenses. 4. We have heard the rival submissions and perused the materials available on record. The assessee company filed its return of income for the assessment year 2014-15 on 26-9-2014, declaring total income of Rs 1,76,36,110. The assessment was completed under section 143(3) of the Act on 7-11- 2016 (2:05) after making an addition of Rs 13,619 to the total income on account of interest on TDS. During the year under consideration, the assessee company claimed weighted deduction equal to 200 percent of expenditure incurred on in-house research and development amounting to Rs 1,33,52,427. The assessee duly filed the copy of Form 3CK and 3CM before the lower authorities which are also enclosed ....
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....ed deduction of Rs. 1,33,52,428/-i.e. 200% of Rs. 66,76,214(refer note 27.1 of the balance sheet). The P&L a/c of the company revealed net profit of Rs. 277.57 Lacs. This profit is inclusive of expenditure incurred for R&D work i.e. the expenditure of Rs. 185.60 Lacs and revenue earned for Rs. 139.50 Lacs have been included in the P&L a/c i.e. note 27.15 of the balance sheet. To avoid multiple deductions, if a/c relating to R&D are separated then net profit of the company is 323.67 Lacs as detailed out below: Expenses as per P&L a/c 27832.31 Lacs Less. Expenses as per R&D a/c 185.60 Lacs Balance expenses 27646.71 Lacs Revenue as per P&L a/c 28109.88 Lacs Less: Revenue as per R&D a/c 139.50 Lacs Balance Revenue = 27970.38 Lacs Therefore, Net Profit excluding R&D A/c = 27970.38-27646.71-323.67 Lacs Profit excluding R&D A/c = 323.67 Lacs Profit including R&D A/c = 277.57 Lacs Difference 46.20 Lacs i.e. Rs. 46,09,631/- This amount of difference has been allowed as deduction under normal provisions of the Act and is needed to added back to the taxable income of the assessee. ....
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....e proceeding u/s 147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under consideration have been recorded above (refer paragraph above). I have carefully considered the assessment records containing the submissions made by the assessee in response to various notices issued during the assessment/reassessment proceedings and have noted that the assessee has not fully and truly disclosed the material facts necessary for his assessment for the year under consideration as the assessee was not required to claim the excess of weighted deduction as per section 35(2AB) amounting to Rs. 46,09,631/-. It is evident from the above facts that the assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating reopening u/s 147 of the Act. It is that the assessee has submitted information a....
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....ssessment proceedings and that no new information or tangible material had come to his possession, which lead him to form a belief that income of the assessee had escaped assessment by claiming excess weighted deduction under Section 35(2AB) of the Act. The learned AO had only merely placed reliance on the very same material that was already available with him on which an opinion had already been framed by the learned AO while framing the assessment under Section 143(3) of the Act. Further, the assessee company had indeed maintained separate accounts for R&D expenditure, which has been independently audited by statutory auditor after verification of all details and guidelines of DSIR. The copy of CA certificate submitted to DSIR was also enclosed before the learned AO and the same is also enclosed in page 108 of the paper book. Hence, the contention of the learned AO that the assessee had not separated the R&D account from the main P&L account is factually incorrect and the reasons recorded has been based on incorrect assumption of fact, which itself becomes fatal to the very assumption of jurisdiction under Section 147 of the Act by the learned AO. Factually, the assessee claimed ....