TMI Blog2010 (8) TMI 484X X X X Extracts X X X X X X X X Extracts X X X X ..... ed deduction u/s. 35(2AB). - at best it could be said that it was only a procedural defect and from the various decisions, noted in the arguments of ld Counsel for the assessee, it is clear that merely on the ground of technicalities of procedure, the benefit bestowed by legislature cannot be denied. - ITA NO. 4246/Mum/2009 - - - Dated:- 20-8-2010 - VIJAY PAL RAO JUDICIAL MEMBER J. S.V. MEHROTRA ACCOUNTANT MEMBER J. Appellant by: Shri S.S. Rana, DR Respondent by: Shri H.N. Motiwalla ORDER Per S.V. Mehrotra, AM The appeal filed by the revenue is directed against the order dated 28.5.2009 of ld CIT (A)-VI, Mumbai for the assessment year 2005-06. The only ground raised by the revenue reads as under:- On the facts and in the circumstances of the case, ld CIT (A) erred in allowing the appeal of the assessee in respect of deduction u/s.35(2AB) amounting to Rs. 11,21,461/- without appreciating the fact that the assessee did not satisfy the requisite conditions necessary for allowing deduction u/s.35(2AB) of the Act. 2. Facts in brief are that the assessee company, in the relevant assessment year, carried on the business of manufacturing of electrical and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion u/s.35(2AB) is Secretary, DSIR. vi) Calculation of weighted deduction of Rs. 33,64,384/-. vii) Name, addresses, work done, salary of each employees / wages debited to R D unit. viii) How Director remuneration, foreign travel expenses can be claimed for weighted deduction. ix) Where R D unit is situated, whether any other part of your business is also being run from the same premises. x) All bills for R D are (a) in the name of company only, how it can be ensured that no amount debited for R D has not been used for non R D purposes. The assessee s reply dated 23.11.2007 has been reproduced, in which, it was stated that the assessee company had first made an application to the Ministry of Science Technology, Department of Scientific Industrial Research, New Delhi, for granting recognition for in-house research development facilities on 6.3.1997 and, the approval was granted by the Department of Science and Industrial Research on 3.7.1997. The assessee also filed all the renewals of this recognition. The assessee pointed out that it had complied with the requirements of section 35(2AB) at the time of making application and getting recognition for the in-hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration but no time limit has been prescribed under law for filing this application. He also took note of the contents of the note sheet of DSIR obtained by the assessee under Right to Information Act. He noted from the same that the application for the year under consideration had been processed by the lower authorities but remained unattended by the concerned officer of DSIR inasmuch as neither the same had been rejected nor approved though for subsequent years, approval has been granted after expansion of factory site. He further noted that as per Rule 6(1B) for the purposes of sub- section (2AB) of Section 35, the prescribed authority is Secretary, Department of Scientific and Industrial Research and as per rule 5A, the prescribed authority if satisfied that the conditions provided in this Rule and in sub-section (2AB) of Section 35 of the Act are fulfilled, pass order in writing in Form No.3CM provided that reasonable opportunity of being heard was to be granted before rejecting the application. He noted that no opportunity has been afforded to the assessee company till date. Therefore, the assessee was deprived of benefit of section 35(2AB) for no fault of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 2005-06 were taken and the objection was raised, the assessee came to know of the prescribed procedure and then filed the application on 28.4.2008 giving particulars of approval and also expenditure for the financial year 2002-03 to 2004-05. He pointed out that the prescribed authority viz Government of India, Ministry of Science and Technology, Department of Scientific Industrial Research vide its order dated 28.8.2008 granted the approval in form 3CM w.e.f. 1.4.2007 to 31.3.2011. Ld Counsel pointed out that the approval has been granted by the prescribed authority in prescribed manner. Ld counsel submitted that under the Act and Rules, no time limit has been prescribed for complying with the prescribed procedure for grant of approval. Further, during the course of assessment proceedings, the approval subsequently granted in prescribed form was made available. He submitted that it is well settled law that exemption should not be whittled down for want of procedure. In this regard, he relied on the decision of the Hon ble Supreme Court in the case of CIT v. Raja Benoy Kumar Sahas Roy, 32 ITR 466(SC), wherein at page 475, the Hon ble Supreme Court has noted that ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions; quantum of tax concessions, development rebates and others, if any, will be governed by the tax laws in operation from time to time. All such matters should be taken up directly with the concerned tax authorities. This recognition was renewed time and again by various orders, noted earlier, in the arguments of ld Counsel for the assessee and, thus, the approval was available upto 31.3.2011 vide latest order dated 29.4.2008. For the assessment year 2005-06, the AO raised objection for the first time in course of assessment proceedings regarding approval being not in the prescribed form. Therefore, the assessee filed an application in the prescribed form No. 3CM on 28.4.2008 giving all relevant details including expenditure on scientific research for F.Y. 2002-03 to 2004-05. On this application, the approval has been granted w.e.f. 1.4.2007 to 31.3.2011. The assessee obtained the note sheets with reference to its application dt.28.4.2008 under Right to Information Act from DSIR and noted that the application for earlier years including A.Y. under consideration had been considered in para 3. However, the approval was granted from 1.4.2007 to 31.3.2011. 6.1 In the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 3CM. However, as per the proviso to sub-rule (5A), if the prescribed authority is not so satisfied it is to grant reasonable opportunity to the assessee company before rejecting its application. Sub-Rule (7A) prescribes the certain conditions subject to which approval is to be granted. A close reading of the section r.w. Rule 6 would reveal that nowhere any time has been prescribed within which the application is required to be filed by the assessee company. Further, nowhere, any condition has been prescribed regarding cut off date from which the approval could be made effective. Therefore, once the assessee company is granted approval it will apply till it is revoked with reference to all the assessment years, which come within the ambit of that period. Therefore, mere mentioning of 1.4.2007 in the order dated 28.8.2008 was of no consequence and the approval granted in Form 3CM was also applicable for A.Y. 2005-06. In this regard, it is further noticeable that while granting of approval on 28.8.2008, the prescribed authority has, inter alia, observed in para 5 as under:- Ref.No. and Date of the application : Ref NBil dated 16.8.2007 The above Research Develop ..... X X X X Extracts X X X X X X X X Extracts X X X X
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