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2019 (10) TMI 134 - ITAT MUMBAIDisallowance of deduction u/s 35(2AB) - weighted deduction based on the Auditors Certificates and Tax Audit Report - AO after verifying Form Nos. 3CM and 3CL concerning the deduction claimed by the assessee u/s. 35(AB)that the eligible amount, as noted by the Department of Scientific and Industrial Research (‘DSIR’ for short), in Form No. 3CL was less as compared to the deduction claimed by the assessee - HELD THAT:- The year under consideration is A.Y. 2009-10 and, for this year, the amendment was not applicable. Therefore, the assessee is right in contending that the non approval of the expenditure claimed by CSIR did not entitle the A.O. to make the disallowance and the ld. CIT(A) to confirm the same. This does also take care of a without prejudice contentions raised by the assessee, to the fact that deduction of actual expenditure be allowed to the assessee under the provisions of section 35(1)(i) and 35(1)(iv). These provisions of allowing 100% deduction of expenditure on in-house scientific research, irrespective of the approval of the unit and the certification of the expenditure, where the actual expenditure, as in the case of the assessee is verified by the Statutory Auditor and certified by the Independent Auditor and Tax Auditor. The assessee is found correct in contending that the ld. CIT(A) has observed that the extent of the expenditure was never verified by the A.O. Thus, according to the assessee it goes to confirms that the A.O. disallowed the claim without due application of mind. This contention of the assessee is correct, as evident from the assessment order itself, wherein the ground for the disallowance was the non approval of the expenditure claimed by the DSIR. On behalf of the assessee, another contention has been raised, that the ld. CIT(A) is wrong in observing that during the remand proceedings, the assessee has not objected to the action of the A.O. in making the disallowance u/s. 35(2AB). This, it has been emphasized, that the assessee had always objected to the disallowance before the A.O. as well as the ld. CIT(A). The attention in this regard has been drawn to the grounds taken by the assessee and the submissions raised by the assessee before the ld. CIT(A). It has further been submitted that in the remand proceedings, qua this issue, no enquiry whatsoever had been made by the A.O., notwithstanding the fact that the remand proceedings were proceedings where the assessee was required to press his claim afresh, which could have only be done by way of objecting to the action of the A.O. Finding merit in ground no. 1 raised by the assessee, the same is hereby accepted to the reversing order passed by the ld. CIT(A) on this issue and deleting the disallowance made u/s. 35(2AB). Deprecation to the assessee on higher revised opening WDV of the building - HELD THAT:- Assessee was not in a position to claim higher depreciation in the return of income by adjusting the opening WDV. There is no provision in law pointed out to us for habiting the assessee from making the claim of such like the present one in the assessment proceedings. Rather, it stands well settled that the claims of depreciation need must be allowed by the A.O. irrespective of whether the assessee has himself made such claim or not. However, there is no dispute about the entitlement of the assessee to claim of the depreciation. The A.O. ought to have allowed the higher depreciation on the direction issued by the ld. CIT(A), which, unfortunately, has not come about. Accordingly, the A.O. is now directed to upwardly revise the opening WDV and to allow the higher deprecation to the assessee on the part of the building CG house, which part was utilized by the assessee for its business purpose Disallowance u/s. 14A read with Rule 8D(2)(ii) - HELD THAT:- The assertion of the assessee that except for earning the exempt income is, as a practice, directly credited electronically to the bank account of the company and the payment is made by the Managers of the Mutual Funds, who make the payment directly and manage the investments, has nowhere been rebutted by either of the authorities below or even before us. It has not been called any question that the activity of investment did not require any expenditure. A mere perusal of the assessment order makes it explicit that no finding at all had been recorded by the A.O. as to the incurrence of any expenditure by the assessee for earning exempt income. That being so, the assessee is correct in contending that no disallowance u/s. 14A was called for. It at all, the salary of ₹ 7,91,181/-, paid to the Treasury Manager, Shri Prashant Baliga could be considered for disallowance. This factual assertion of the assessee may be verified at the level of the A.O. and, thereafter, the disallowance may be computed, for which, the issue is remitted to the file of the A.O. Fresh claim of the assessee concerning the dividend income u/s.10(35) - HELD THAT:- Evidently, the claim made by the assessee cannot be shut out, in view of the Hon'ble Supreme Court decision in the case of Goetze (India) Ltd. v. CIT [2006 (3) TMI 75 - SUPREME COURT] , as considered by the Mumbai ITAT in the case of APL India(L) Ltd [2012 (7) TMI 492 - ITAT, MUMBAI] and also referred to in the decision of the ITAT Cochin in the case of Apollo Tyres [2013 (11) TMI 209 - ITAT COCHIN] holding that the appellate authorities are not debarred to entertain the fresh claim. No decision contrary to the said decisions, as referred to by the ld. CIT(A) amongst others. Therefore, it cannot be said that the ld. CIT(A) committed any error in entertaining the claim made by the assessee.
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