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2017 (8) TMI 1255 - AT - Income TaxReopening of assessment - reason to believe - claim of R&D expenses u/s 35 - Assessee has also claimed deduction u/s. 80IC by apportioning R & D expenses amongst various units. AO declined apportionment and reduced quantum of deduction u/s.80IC - trading sales - Held that:- CIT(A) has deleted the addition / disallowance merely by stating that issue of allocation of R & D expenses was subject matter of appeal, hence as per the proviso to Section 147 of the Act. - order is CIT(A) is not correct as per the facts of the case. During the course of re-assessment proceedings, AO found that trading sales has no connection with the R & D expenses so incurred by the assessee, accordingly he directed that the apportionment of R & D expenditure should be made after excluding the sales. However, in the course of original assessment which was subject matter of appeal before the CIT(A) only apportionment was declined by AO, whereas in the re-assessment proceedings, AO has precisely excluded the trading sales before apportionment of R & D expenditure. However, in the instant appeal before us, the CIT(A) has not decided the issue on merit. Moreover, the judgment relied on by learned AR in case of ICICI Bank Ltd. [2012 (7) TMI 521 - BOMBAY HIGH COURT] are distinguishable on facts in so far as Bombay High Court was dealing with the 2nd proviso to Section 147 whereas assessee is arguing on third proviso to Section 147. In the interest of justice, we restore the matter back to the file of the CIT(A) for deciding the issue on merit. - Decided in favor of revenue.
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