TaxTMI 
TaxTMI 
2026 (9) TMI 599
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....he requisite conditions. 2. The Ld. AO erred in not giving an opportunity to the assessee for explaining the facts under the new E-assessment Scheme and not accepting the request of the assessee for Video Conferencing (VC) placed on 09/03/2021 against the draft assessment order and passing the final order without any hearing based on the submissions on record on 13/03/2021. 3. The Appellant craves leave to add, amend, alter, modify or delete all or any of the grounds raised in the appeal." 2. Brief facts of the case are as under:- Assessee is a listed public limited company engaged in the business of manufacturing chemicals, particularly Acrylonitrile Butadiene Styrene ("ABS") and Styrene Acrylonitrile ("SAN") resins. The assessee filed its original return of income for the year under consideration on 31/10/2018, declaring total income of Rs. 149,99,56,200/-. Subsequently, the assessee filed a revised return of income on 31/03/2019, declaring total income of Rs. 148,87,47,550/-. The case was selected for complete scrutiny under CASS for examination of the following issues: * Reduction of income in the revised return and claim of refund; ....
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....he connection of such research with the assessee's business. It was therefore submitted that the deduction could not be denied merely because the DSIR approval was granted in a subsequent year. 3.1.1. Without prejudice, the assessee submitted that even if DSIR approval were regarded as necessary, subsequent approval of the research facility would be sufficient. Reliance was placed upon the following decisions: * CIT v. Claris Lifesciences Ltd., reported in [2010] 326 ITR 251 (Guj.); * PCIT v. Strides Arcolab Ltd., ITA No. 1674 of 2016 (Bom.); * Maruti Suzuki India Ltd. v. Union of India, W.P.(C) No. 9306 of 2015 (Del.); * CIT v. Wheels India Ltd., reported in [2011] 336 ITR 513 (Mad.) * CIT v. Sandan Vikas (India) Ltd.*, reported in [2011] 335 ITR 117 (Del.); and * Banco Products (India) Ltd. v. DCIT, Tax Appeal No. 1057 of 2017." 3.2. It was further submitted that Form No. 3CL is prescribed for the purpose of weighted deduction u/s. 35(2AB) of the Act and has no application to a claim made u/s. 35(1)(iv) r.w.s. 35(2) of the Act. 3.3. The assessee also challenged the validity of the assessment order on the ground that i....
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....r scientific research. 4.2. The Ld.AR further submitted that the decision relied upon by the Ld. CIT(A) in Hindustan Lever Ltd., (supra), concerned the validity of reassessment proceedings and did not hold that expenditure incurred on an R&D building was excluded from section 35(1)(iv) of the Act. It was thus submitted that, the reliance placed by the Ld.CIT(A) on the said decision was wholly misplaced. The Ld.AR submitted that the Ld.AO had not disputed the actual incurrence of expenditure, its capital nature, use of the building for scientific research or the nexus of such research with the assessee's business. Therefore, all the conditions prescribed u/s. 35(1)(iv) r.w.s. 35(2) stood satisfied. He accordingly prayed that the disallowance be deleted. 4.3. The Ld.DR relied upon the orders passed by the authorities below. The Ld.DR submitted that the DSIR approval was not operative during the year under consideration and that the assessee had not furnished Form No. 3CL certifying the eligible expenditure. The Ld. DR accordingly prayed for confirmation of the disallowance. We have perused the submissions advanced by both sides in light of the record placed before us. 5. ....
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....ons recorded for reopening an assessment u/s. 147 of the Act. It does not lay down any proposition that expenditure incurred on construction of a building used for scientific research is excluded from the scope of section 35(1)(iv). The ratio attributed to the said decision in the impugned order is therefore not borne out from the judgment. 6.5. On the contrary, the Hon'ble Bombay High Court in CIT v. Sandoz (India) Ltd., reported in (1994) 206 ITR 385, considered the scope of section 35(1)(iv) in relation to capital expenditure incurred on construction of an approach road to the assessee's research and development laboratory. The decision recognises that capital expenditure on an asset integrally connected with scientific research related to the assessee's business falls within the ambit of section 35(1)(iv). 6.6. In the present case, the following facts stand undisputed: * The assessee incurred capital expenditure of Rs. 1,12,08,649/- during the relevant previous year; * The expenditure was incurred on construction of an R&D building; * The building was used for scientific research activities; * The scientific research activities were rel....