TMI Blog2018 (5) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the matter, and proceeded to treat reimbursement of expenses as incurring of expenses. Disallowance to be deleted - Decided in favour of assessee. - ITA Nos.2446 And 2907/Ahd/2013 - - - Dated:- 24-4-2018 - Pramod Kumar AM And Mahavir Prasad JM For The Applicant : S.N. Soparkar and Parin shah For The Respondent : Mudit Nagpal ORDER Per Pramod Kumar, AM: This appeal i.e. ITA No.2446/Ahd/2013, filed by the assessee, is directed against the order dated 22nd August 2013 passed by the learned CIT(A), in the matter of assessment under section 143(3) of the Income Tax Act, 1961 ( the Act hereinafter), for the assessment year 2010-11. 2. When this appeal was taken up for hearing, learned Senior counsel for the assessee fairly submitted that ground no.3 is not required to be adjudicated on merits in this appeal. It is so for the reason that in the impugned order, learned CIT(A) had not adjudicated on the related ground of appeal before him, but when it was pointed out to the learned CIT(A), he disposed of the same, by a subsequent order dated 3rd October, 2013, which is separately in appeal before us. He submits that, in view of this subsequent d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The reply of the assessee is considered however it is not acceptable. The explanation below sec.35(2AB) of the Act refers as, ( 3) No company shall be entitled for deduction under clause (1) unless it enters into an agreement with the prescribed authority for co-operation in such research and development facility and for audit of the accounts maintained for that facility. ( 4) The prescribed authority shall submit its report in relation to the approval of the said facility to the Director-General in such form and within such time as may be prescribed. .. The company who is availing facility of claiming R D expenses @150% has to submit its yearly report to Ministry of Science and Technology, Department of Scientific and Industrial Research, New Delhi in Form 3CL, however for AY 2010-11 assessee has not submitted such report. In reply submitted on 28.12.2012, the assessee itself submits at point no.3 that the company has filed application for approval with the prescribed authority u/s.35(2AB) of the Act on 18.5.2010 and the same was approved vide Form No.3CM dated 5.7.2011 w.e.f. 1.4.2010 i.e. w.e.f. F.Y. 2010-11 relevant to A.Y. 2011-12. However in rep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove details to be entitled for such weighted deduction. It is worthwhile to mention that vide order sheet dated 8.11.2012 the assessee was specifically requested to furnish the evidence of filing of Form No.SCL with the prescribed authority, but assessee could not furnish and the same was recorded in order sheet dated 20.12.2012. The case law relied upon by the assessee is also not applicable in the case of assessee, because the facts in assessee's case are different. In assessee's case the assessee has failed to comply to the details required under this provision. Further more in assessee's case the period for approval of its R D unit is clearly stated from 1.4.2010 to 31.3.2012. Therefore, the assessee is not entitled for claiming R D expenses @150% in the year under consideration. Since, 100% R D expenses has already been claimed in P I a/c., assessee is not entitled for further claim of 50% amounting to ₹ 1,12,84,050/- as weighted deduction u/s.35(2AB) of the Act. Therefore, ₹ 1,12,84,050/- is disallowed and added back to the total income of the assessee. Penalty proceedings u/s. 271(1)(c) of the I.T. Act, 1961 are separately initiated for furni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules 6(7A) of the IT Rules 1962 while claiming deduction u/s 35(2AB) for A.Y. 2010-11. It has also not fulfilled the conditions imposed by the guidelines of the DSIR so far as no separate audit of separate books of accounts for such R D facility for the Year 2009-10 has been carried out. 6.4. The appellant has relied upon the decision of Honorable Gujarat High Court in the case of Claris Life Sciences Ltd. (Supra), The perusal of this decision shows that in this case the approval by DSIR was granted on 27.02.2001. The assessee claimed deduction u/s 35(2AB) for the entire year i.e. F.Y. 2000-01. The AO granted this only from 27.02.2001. The Honorable High Court held that since the approval was granted during the previous year relevant to the assessment year in question, the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under section 35(2AB) of the Act by the assessee. Thus the facts of this case are different from the present appeal. In the present appeal the approval has been granted by DSIR on 15.07.2011 w.e.f, 01.04.2010 on the basis of application made on 18.05.2010. Thus the appellant has been already granted deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entioned in the certificate of the DSIR or even the date of approval but the existence of the recognition. If a R D Centre is not recognised it is not entitled to deduction but if it is recognised, it is entitled to the benefit. The Gujarat High Court in Claris Lifesciences (supra) has rightly observed that the date of approval of the R D Centre, not being a part of the provision, extending benefit only from the date of recognition amounts to reading more in the law which is not expressly provided . 41. Section 35 (2AB) clearly provides that any expenditure incurred by a party on its R D facility except, insofar as it relates to land and building is liable to be allowed to be claimed as deduction (twice the amount of expenditure). A perusal of the scheme of the Act especially Sections 35 (2AB), 35A and 35AB reveals in no uncertain terms, that the purpose behind these provisions is to provide impetus for research, development of new technologies, obtaining patent rights, copyrights and know-how. 42. Insofar as the Apollo Tyres (supra)is concerned, in the said case, the Petitioner had omitted to apply for approval under Form 3CK, though recognition was granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the certification for the Gurgaon R D centres, for AYs 2012-13 and 2013-14, no orders are called for in that respect. The Respondent No.2 is further directed to give consequential deductions as per Section 35 (2AB) to the Petitioner 10. Clearly, therefore, the stand of the CIT(A) is not sustainable in law. We vacate the same and direct the Assessing Officer to grant deduction under section 35(2AB), as, beyond any dispute or controversy, the R D Unit is approved by the prescribed authority, and as the date of approval, in the light of the above discussions, is not really material for the present purposes. The disallowance thus stands deleted. 11. In the result, the appeal No.2446/Ahd/2013 is partly allowed in the terms indicated above. 12. We now take up ITA No.2907/Ahd/2013. This appeal is directed against the order dated 03.10.2013 passed by the ld. CIT(A) under section 154 r.w.s. 250/143(3) of the Income-tax Act, 1961, for the assessment year 2010-11. 13. Grievance raised by the assessee-appellant is as follows:- The learned CIT(A) has erred in law and on facts of the appellant s case in confirming the action of the Learned AO of disallowing reimbursement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 6,93,372/- towards reimbursement of CHA charges paid to C F agent and ₹ 76,00,509/- towards reimbursement of expenses towards consignment agents. The aforesaid expenses were disallowed by the Assessing Officer solely on the ground that the assessee has not deducted the TDS on the aforesaid accounts. 3. In an appeal by the assessee the Commissioner (Appeals) allowed such deductions observing that so far as the amount of ₹ 6,93,372/- is concerned as such the agent had already deducted the TDS and deposited in the Government and, therefore, there was no further liability of the assessee to deduct the TDS. With respect to ₹ 76,00,509/-, the CIT(A) observed that the said amount was towards the reimbursement of the expenses to the consignment agent, which was in fact incurred on behalf of the assessee and there was no profit element. The CIT(A) held that the assessee was not required to deduct the TDS on such reimbursement and, therefore, the Assessing Officer was not justified in making the above disallowance and accordingly directed to delete the same. Being aggrieved and dissatisfied with the order passed by the CIT(A) in holding the above the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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