Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (2) TMI 1582 - AT - Income TaxRevision u/s 263 - assessment order passed by the AO is erroneous insofar as it is prejudicial to the interest of the revenue - AO has allowed deduction claimed u/s 35(1) towards R & D expenditure even though the assessee is not eligible for deduction - Held that:- AO has allowed deduction claimed u/s 35(1) without any discussion as to whether the claim made by the assessee is in accordance with provisions of section 35(1) or not. We further notice that the authorised representative of the assessee accepted before the CIT that it has not maintained separate books of account in respect of R&D facility even though it was required to maintain separate books of account as per the provisions of the Act. CIT was right in setting aside the assessment order passed by the AO u/s 143(3) as the assessment order is erroneous insofar as it is prejudicial to the interest of the revenue. We find merit in the arguments of the assessee that the CIT has given specific direction to the AO to disallow deduction claimed u/s 35(1), without offering an opportunity to furnish necessary details. The CIT, in his order, has given specific direction to the AO to disallow claim of deduction u/s 35(1), in the fresh assessment order passed consequent to order passed u/s 263. Therefore, we are of the view that the direction given by the CIT needs to be modified to the extent of allowing the AO to examine the claim of the assessee in the light of provisions of section 35(1) and explanation of the assessee so as to come to a conclusion that assessee is not eligible for deduction. - Appeal filed by the assessee is partly allowed, for statistical purpose.
|