TMI Blog2013 (8) TMI 762X X X X Extracts X X X X X X X X Extracts X X X X ..... iate provisions of the Act will have to be considered. - Decided against Revenue. - ITA No. 882/H/10, ITA No. 392/H/12, ITA No. 393/H/12, ITA No. 114/H/13 - - - Dated:- 15-7-2013 - Shri Chandra Poojari And Smt. Asha Vijayaraghavan,JJ. For the Appellant : Shri M. H. Naik For the Respondent : Shri K. C. Devdas ORDER Per Asha Vijayaraghavan, J.M. All these appeals preferred by the Revenue are directed against separate orders of learned CIT(A). Since identical issues are involved in these appeals, they were clubbed and heard together and, therefore, we find it convenient to dispose of these appeals by way of this consolidated order. ITA No. 882/Hyd/10 - for AY 2006-07 2. The assessee company is engaged in the manufacturing of the chemicals, cellulose powder and allied products. The assessee company was registered entity with the Department of Science Technology and according to the assessee it was eligible for claiming weighted deduction u/s 35(2AB) of the Act in respect of expenditure on Research and Development activities carried out. For the relevant previous year, the assessee company had incurred an expenditure of Rs. 1,50,44,807/- and the same was claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1,27,315/) to its total income and thereafter had claimed deduction u/s 35(2AB) @ 150%. The assessee contended that the Assessing Officer disallowed the claim u/s 35(2AB) without correspondingly allowing the revenue expenditure which was added to the computation of income, which tantamounts to double addition. The assessee also contended that Rs. 45,97,325/- which was originally added to the computation of total income should be deducted from the total income. After considering the submissions of the assessee the CIT(A) held as under:- "5.1 I have gone through the facts of the issue. I find that in the computation of total income filed along with the return of income, the appellant had added back Rs. 45,97,325/- to its net profit in the P L A/CIT (A) and had thereafter claimed deduction u/s 35(2AB) of Rs. 68,95,988/-. The Assessing Officer has disallowed the claim u/s 35(2AB) on the ground that the requisite certificate from the prescribed authority has not been filed by the appellant. I also find that an identical issue was decided by me in appellant's own case for the ASSESSMENT YEAR 2005-06 in ITA No. 222/CIT(A)-II/Hyd/07-08, dated 19/06/08. While deciding the appeal I had h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diture incurred by the approved R D facilities is not considered for weighted deduction under Section 35(2AB) would not render that expenditure is not towards R D or not for the purposes of the business. Allowability of such expenditure u/s 35(1) or under other appropriate provisions of the Act will have to be considered. 13. Hence, the cross objection (C.O. No. 47/Hyd/09) claiming weighted deduction under section 35(2AB) on the ground that requisite certificate from the DSIR has been received is treated as allowed for statistical purposes." 7. Since the issue in dispute is identical to that of the case decided by the coordinate bench in the case of M/s Baghiradha Chemicals Industries Ltd. (supra), respectfully following the same, we find no infirmity in the order of the CIT(A) and, therefore, the same is upheld on this issue. Accordingly, the ground raised by the revenue is dismissed. 8. Ground No. 3 is pertaining to the disallowance made on account of deferment of sales tax. 9. The AO noticed that the company had availed sales tax benefit of Rs. 172.70 lakhs and since no explanation had been offered of Rs. 172.40 lakhs, the AO brought the same to tax in the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceipts alone. Accordingly, the CIT(A) deleted the addition made by the AO on the ground that such receipts cannot be brought to tax as revenue receipts since the receipts have lost their revenue nature in the sands of time. 12. Aggrieved, the revenue is in appeal before us. 13. We have heard the arguments of both the parties, perused the record and have gone through the orders of the authorities below. We find that this issue has not been considered by the AO, as no particulars were furnished before him. Therefore, in the interest of justice, we deem it fit and proper to set aside the issue to the file of the AO to decide the same afresh in accordance with law after giving reasonable opportunity of hearing to the assessee. 14. In the result, revenue's appeal being ITA No. 882/Hyd/2010 is partly allowed for statistical purposes. ITA No. 392 393/Hyd/12 and 114/Hyd/13 for AY 2007-08, 2008-09 2009-10. 15. The revenue has raised a common ground in these appeals which is as under: "The learned CIT(A) ought to have upheld the disallowance of deduction u/s 35(2AB) in view of assessee's failure to produce Form No. 3CL." 16. The only issue in all the three appeals is ident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s eligible for deduction u/s 35(2AB) and even for the same approval was awaited. Accordingly, the claim of Rs. 24,28,777/- was not allowed and the AO disallowed the total claim of Rs. 2,19,08,282/-. 19. Aggrieved, the assessee carried the matter in appeal before the CIT(A). 20. After considering the submissions of the assessee, the CIT(A) held that in order to avail the weighted deduction u/s 35(2AB) of the Act, the appellant is required to fulfil the requirements of Rule 6(1B), which prescribe Form Nos. 3CK, 3CM and 3CL. Out of these, Form No. 3CK is the 'Application form for entering into an agreement with DISR for cooperation in In- house Research and Development facility and for audit of the accounts maintained for that facility'. The Form No. 3CM is the 'Order of the approval of In-house R D Facility under sec. 35(2AB) of the Act' to the passed by the Secretary, DISR. Finally, the Form No. 3CL is issued, which is a 'Report to be submitted by the prescribed authority to the DGIT (Exemptions) under sec. 35(2AB)'. 21. The CIT(A) further held that it is an undisputed fact that the appellant has been granted approval by the DISR. The requisite form No. 3CM dtd. 1.1 1.2006 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim of deduction u/s 35(1)(ii), it was opined that even if deduction is not allowable u/s 35(1)(ii), it can be allowed to the assessee u/s 35(1)(i), in case the assessee satisfies all the conditions provided in sec. 35(1)(i). It is seen that the said decision had been followed by the Hon'ble Delhi Bench of the ITAT in the case of Panacea Biotech Ltd. Vs. ACIT (122 ITD 199) also. The CIT(A) held that since in the present assessee's case, the requisite conditions for claiming deduction u/s 35(1)(i) have been satisfied, even if its claim for weighted deduction u/s 35(2AB) is not considered, applying the ratio of the above referred case, the assessee has to be allowed deduction u/s 35(1)(i). 24. As regards, the claim of weighted deduction u/s 35(2AB), the CIT(A) held that the assessee has been accepted as an R D Centre in the AY 2005-06. The appellant's R D facility has also been granted recognition till 31/03/2013. The claim of additional depreciation during the year has been denied on the only ground that the requisite form No. 3CL has not been furnished. However, it is seen that the Hon'ble Delhi ITAT in the case of Sandan Vikas (India) Ltd. Vs. ACIT in ITA No. 1105/Del/2009 d ..... 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