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2022 (8) TMI 83 - AT - Income TaxAllowance of R&D expenditure u/s.35(2AB) as weighted deduction - HELD THAT:- It is the settled proposition of law that for claiming any expenditure as an allowable deduction, the onus is always on the assessee to explain to the satisfaction of the AO that such expenditure has been laid out wholly and exclusively for the purpose of business. In the instant case although there is no dispute to the fact regarding the incurring of such expenditure, the only reason of the ld.CIT(A) for disallowing the same is that the assessee never explained whether the business carried on by the assessee and the income generated by it has any relation or connection with such expenditure claimed. A perusal of the assessment order shows that assessee claimed R&D expenditure u/s.35(2AB) as weighted deduction. As per Form 3CL, the R&D expenditure is eligible for deduction at Rs. 2,68,28,000/- and therefore, the AO held that the assessee has claimed excess R&D expenditure of Rs. 25,40,763/- and accordingly disallowed the amount of Rs. 12,69,409/- being 50% of Rs.25,40,763/-. We find the ld.CIT(A) has given a finding that similar issue has been decided against the assessee. However, nothing was brought to our notice about the final outcome of the same. We therefore deem it proper to restore the issue to the file of the AO with the direction to verify the record and decide the issue afresh and as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The ground of appeal No.2 is accordingly allowed for statistical purposes. Disallowances of depreciation on lease hold rights @ 25% - Since according to the AO the premium paid by the assessee to acquire the lease hold rights should be amortized over a period of 33 years and depreciation on the same is not allowable, therefore, he issued a show-cause notice to the assessee to explain as to why depreciation should not be disallowed - HELD THAT:- We find the issue stands decided in favour of the assessee in assessee’s own case in the immediately preceding assessment year [2021 (8) TMI 1328 - ITAT HYDERABAD] wherein the issue in assessee’s favour that a right to operate any asset forms an intangible asset u/s.32(1)(ii) of the Act entitled for depreciation.- Decided in favour of assessee.
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