TMI Blog2012 (4) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... of income on 31.10.2004, admitting total income of ₹ 41,43,231/-. The original assessment u/s 143(3) of the Act was completed on 5.12.2006 determining the taxable income at ₹ 1,28,52,642/-. 3. The Assessing Officer noticed that the assessee had claimed deduction of ₹ 26,84,451/- towards research and development expenses u/s 35(2AB) of the Act. Since the benefit of deduction u/s 35(2AB) of the Act is available only to the companies involved in the business of bio technology, the Assessing Officer issued notice u/s 148 of the Act. The Assessing Officer completed the assessment u/s 143(3) r.w.s. 147 of the Act on 18.9.2009 determining the total income of the assessee company at ₹ 77,82,061/- after setting off of loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not incur any such expenses. It is an admitted and accepted fact that the assessee had incurred expenditure. The discussion in the assessment order and disallowance is u/s 35(2AB) which is with regard to enhanced deduction claim. The general deduction for the actual expenditure incurred is u8/s 37. 6. The assessee submitted before the AO that in the previous assessments completed u/s 143(3) and in the subsequent assessments completed also u/s 143(3) no where the genuineness of the expenses is doubted and the deduction at one time is always allowed after proper verification of the details called for and submitted. In the circumstances the proposal u/s 148 is not correct. 7. The AO held that the assessee s contention is not acceptabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the original order of the current assessment year. 10. The CIT(A) has held as follows: I have considered the facts of the case and all the arguments. Section 35(2AB) of the Act has been incorporated for the encouragement of specified research. That is the reason why the section allows 1.5 times of the actual research and development expense as a deduction. In the present case, the Assessing Officer has not contended that the expenditure of ₹ 17,89,632/- is either bogus or has not been expended for business purpose. It is not the case of Assessing Officer that such an expense is not allowable at all. Therefore, it is to be deduced that the aforementioned expenditure is correct and has been made for business purpose. There is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.10.2007 admitting total income of ₹ 18,33,250/- after claiming income from wind power project of ₹ 41,77,145/- as deduction u/s 80 IA(2) of the Act. The AO completed the assessment u/s 143(3) of the Act determining the total income of the assessee company at ₹ 64,33,621/- including short term capital gains of ₹ 11,07,172/- by making the following additions/disallowances: a) Disallowance of exemption u/s 10(1) of the Act of ₹ 41,17,645/-. b) Disallowance of deduction of ₹ 4,32,722/- towards proportionate interest on the loan taken from HDFC Bank. 2. The first issue deals with the disallowance of claim u/s 10(1) of the Act, whereby the assessee had claimed ₹ 41,17,645/- as agricultural inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT Act. The assessee is admittedly claiming exemption u/s 10(1) in respect of basic foundation seeds which were generated by performing agricultural operation by the land by the assessee. This Tribunal in the assessee s own case for assessment year 2001-02 considered this issue and found that the assessee is entitled for exemption u/s 10(1) with regard to the basic seeds which were generated out of cultivation made by the assessee. In our opinion, the decision of the Tribunal for assessment year 2001-02 in the assessee s own case is equally applicable to the assessment year under consideration. Therefore, by following the order of this Tribunal in ITA No.943/Hyd/2004 dated 18.1.2008, we hold that the assessee is entitled for exemption u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The assessee stated that the balance of interest out of ₹ 19,00,000 had been added back u/s 14A of the Act as it related to income which was not taxable. 9. The CIT(A) deleted the addition. 10. We heard both the parties and perused the books of account and details and from the facts of the case it is clear that only the interest component relating to taxable income has been claimed as a deduction. Further, the AO has not given any reasons as to why the nexus is not there. It is clear that the loan has been taken from the HDFC Bank and the interest has been paid on the same. Hence, we confirm the order of the CIT(A) and delete the additions. 11. In the result, the Revenue s appeal on this issue is dismissed. 12. Hence the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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