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2023 (3) TMI 338 - AT - Income TaxRevision u/s 263 - claim of deduction u/s.35(2AB) - whether once the assessee is covered under approval granted by DSIR, does the Assessing Officer has any power to question the same as approval granted by DSIR under power vested under the provisions of section 35(2AB)? - HELD THAT:- In our view, the Assessing Officer has rightly allowed claim of deduction u/s.35(2AB) of the Act based on Form No.3CM & Form No.3CL issued by DSIR, as per provisions of section 35(2AB) of the Act, which does not give power to the Assessing Officer jurisdiction to question approval granted by the DSIR. As regards argument of the Revenue that the assessee is engaged in manufacturing of cosmetics and toilet preparations, in our view, observations of the Revenue is not based on facts. We noted the arguments of the Revenue, wherein many products cited by the Department are such as Bikers, Bacto-V, Germ Flush, Electric, Saafoo, Paaga Professional and Lava Berry are products which have been taken from current website of the assessee. We noted that as contended by assessee, these products were launched in recent years i.e. for and from the year 2019 and 2020 and hence, these are not relevant for consideration for assessment year 2011-12. Certificate as approved by DSIR in Form No.3CM & 3CL, which categorically mentions nature of business activity of the assessee as “manufacture and marketing of personal care products”, which clearly proves that the assessee company is engaged in manufacture or production of articles or things, which is eligible for claim of deduction u/s.35(2AB) - Further, sub-section(3) of section 35 clearly provides that if any question arises under this section as to whether, and if so, to what extent, any activity constitutes or constituted, or any asset is or was being used for scientific research, the Board should refer question to the prescribed authority and whose decision shall become final and binding. Neither the Assessing Officer nor the PCIT can sit on judgement on the approval granted by the prescribed authority i.e., DSIR, as in the present case. In the present case before us, even on assumption of jurisdiction, apart from merits as discussed above, the Assessing Officer has allowed deduction while framing assessment u/s.143(3) and u/s.35(2AB) of the Act only after verifying all necessary documents and certificates and hence, we find that assessment order framed is neither erroneous nor prejudicial to the interests of revenue and assumption of jurisdiction by the PCIT is bad in law in the given facts and circumstances of the case. Hence, we set aside the revision order and allow appeal filed by the assessee on merits as well as on assumption of jurisdiction. Appeal of the assessee is allowed.
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