TMI Blog2014 (5) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... mit a certificate from the Chartered Engineer regarding the installed capacity so that the requirement of the AO can be satisfied in this regard – thus, the matter is remitted back to the AO for fresh adjudication – Decided in favour of Assessee. Claim of deduction u/s 35(1)(iv) of the Act – Capital expenses on research and development – Held that:- Following CIT Vs. Deltron Ltd. [2007 (9) TMI 132 - HIGH COURT, DELHI] - while considering the assessee’s claim for deduction u/s 35(1) on account of expenditure on scientific research, the AO is not the prescribed authority in this matter and is not competent to determine as to whether the machinery was for research and development purposes or not - the CIT(A) was justified in holding that the AO could not have disallowed the expenditure without following the procedure laid down u/s 35(3) – thus, there is no reason to interfere in the order of the CIT(A) – Decided against Revenue. - ITA No.5511/Mum/2011, ITA No.5468/Mum/2011 - - - Dated:- 21-2-2014 - SHRI H.L.KARWA AND SHRI R.C.SHARMA, JJ. For the Appellant : Shri Vijay Mehta For the Respondent : Shri R.K. Sahu ORDER Per: R C Sharma: These are the cross a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appreciated. Hence, in the interest of justice and fair-play, we restore this ground also to the file of the AO for deciding afresh after giving due opportunity of being heard to the assessee. 7. The Hon ble Supreme Court in the case of T.R.F Limited Vs. CIT, reported in (2010) 323 ITR 397 (SC) has held that in respect of bad debts written off in the books of account after 1st April, 1989, it is not necessary for the assessee to establish that the debts, in fact, has become the irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee. Respectfully following the proposition of law laid down by the Hon ble Summit Court, we restore the matter back to the file of the AO for deciding afresh in the light of the details furnished by the assessee with respect to each and every bad debts written off in the books of accounts. We direct accordingly. 8. The next grievance of the assessee relates to disallowance of claim for additional depreciation of Rs.36,96,726/-. The AO has disallowed the claim of additional depreciation on the plea that assessee has not given bills of plant and machinery and its installation report so as to establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.2008), we remit the matter back to the file of the AD with a direction to decide the issue by following the guidelines given in Hawkins Cookers' Ltd. Thus this ground of the appeal of the assessee is allowed for statistical purposes Respectfully following the earlier year order we remit back the issue to the file of the AD and redo the working in the light of the decision of Hawkins Cookers Ltd.(supra). We have considered rival contentions. As facts and circumstances during the year under consideration are the same as discussed by the Tribunal in its order dated 30-7-2010, therefore, we restore this ground with regard to addition on account of MODVAT to the file of the AO for deciding afresh in terms of direction given by the Tribunal as quoted above. 10. The AO has also disallowed assessee s claim of deduction under Section 35(1)(iv) amounting to Rs.44,75,136/- on account of capital expenditure on research and development. 11. We have considered the rival contentions and found that the assessee has claimed deduction of Rs. 44,75,136/ - under section 35(1)(iv) of the Income tax Act, being capital expenditure incurred on Research and Development. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n production of better quality and newer newer varieties of Reeds. As submitted earlier the wire cut machine was initially used for R 0 for developing new tools better quality reeds. After the process was successful the Assessee in the subsequent years purchased 3 wire cut machines that were used for regular production of Blanking Tools. We invite reference to provisions of section 43(4) which have defined scientific research as under:- (iii) references to scientific research related to a business or class of business include (a) any scientific research which may lead to or facilitate an extension of that business or, as the case may be, all businesses of that class. In the Present case through the R D using the wire cut machine the Assessee has been able to substantially upgrade its Reed manufacturing quality. Based on the above there would be absolutely no doubt that the wire cut machine was used for R D only. Any question on Research Development to be referred to the Board Without Prejudice to the above, we invite reference to section 35(3) under which any question whether an asset was used for R D etc. is to be refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon by the appellant support its case. Under the circumstances' the appeal of the appellant is allowed and the addition made deleted. 12. Against the above order, Revenue is in appeal before us. 13. Rival contentions have been considered and record perused. During the year under consideration, the assessee has purchased CNC wire cutting machine for which deduction was claimed under Section 35(1)(iv) being the expenditure incurred on research and development. During the course of hearing, the AO asked the assessee to explain as to why this machine should not be considered as normal plant and machinery. The assessee submitted detailed reply, according to which assessee was engaged in manufacturing of reeds , which is manufactured out of special steel by blanking the steel. For doing the same assessee need to cut the steel in specific size and shape, therefore, the assessee acquired CNC wire cutting machine, which has been used by it to research and development of better tools to help in production. The AO also taken statement of technical persons of the assessee company, who described complete manufacturing process. However, the AO declined assessee s claim u/s.35(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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