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2018 (8) TMI 663

as not certified any admissible deduction u/s 35(2AB) - Held that:- It is to be admitted that the A.O. has enquired during the assessment proceedings about the recognition of R & D unit and claim at 200% as per the provisions. Assessee had filed necessary expenditure details and recognition of the R & D unit by DSIR upto 31.03.2015. Thus the finding of Ld CIT that A.O. has not enquired is not factually correct as Form 3CM is on record (even though not stated as 3CM but a registration by DSIR as prescribed). - We are satisfied that the A.O. has correctly allowed the deduction and there is no “error” in the order passed by A.O. u/s 143(3). Once a research facility is approved, entire expenditure incurred on Department of R & D has to be a .....

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entitle the assessee to avail weighted deduction. However, the assessee did not submit any details in Form 3CM and 3CL report. Further, as per clause 15 of the 3CD, Auditor has not certified any admissible deduction u/s 35(2AB). In the absence of mandatory Form 3CM and Form 3CL, allowance of weighted deduction cannot be given. The A.O. allowed this allowance, without complying the related provisions of law, as mentioned above. Since the Assessing Officer has not brought anything on record about this allowance, the same has to be treated as non-application of mind. This non-application of mind is to be treated as error as held by the Hon ble Supreme Court in the case of M/s. Malabar Industrial Limited . 3. When the show-cause noticed was is .....

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Act for the limited purpose of examining the issue of allowability of deduction u/s 35(2AB) on production of Form 3CM and Form 3CL by the assessee. Needless to say that, an opportunity should be given to the assessee before completing the set-aside assessment. 5. Even though assessee raised grounds on the issue of jurisdiction of the non-existing company, these grounds are not argued as the assessee wants the issues to be considered on merits. 6. It was the submission that the A.O. in the course of scrutiny proceedings has enquired about the claim u/s 35(2AB) and referred to the questionnaire issued by A.O. dated 28.04.2014 (Item 5 in Annexure) and replies by assessee dated 26.05.2014 (Item 23 in page 42 of Paper Book) continuation letter d .....

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ion of R & D unit and claim at 200% as per the provisions. Assessee had filed necessary expenditure details and recognition of the R & D unit by DSIR upto 31.03.2015. Thus the finding of Ld CIT that A.O. has not enquired is not factually correct as Form 3CM is on record (even though not stated as 3CM but a registration by DSIR as prescribed). 8.1. Coming to the issue of filing of Form 3CL, the Rule 6(7A) is as under:- [(7A) Approval of expenditure incurred on in-house research and development facility by a company under sub-section (2AB) of section 35 shall be subject to the following conditions, namely :- (a) The facility should not relate purely to market research, sales promotion, quality control, testing, commercial production, .....

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pression audited means the audit of accounts by an accountant, as defined in the Explanation below sub-section (2) of section 288 of the Income-tax Act, 1961; (d) Assets acquired in respect of development of scientific research and development facility shall not be disposed of without the approval of the Secretary, Department of Scientific and Industrial Research.] The Form is to be sent by DSIR to DIT (E). It is an internal mechanism before two Government Departments on which assessee has no role or control, except filing the necessary application with DSIR which assessee complied. So, non-filing of Form 3CL by assessee does not arise in such a situation. 8.2. Coordinate Bench at Kolkata on similar facts while examining jurisdiction u/s 26 .....

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at the view taken by the Courts and Tribunal are not correct, the said views were a possible view. Once the view taken by the AO is either correct or a possible view then the CIT in exercise of his powers u/s.263 of the Act cannot hold the order of the AO to be erroneous just because he does not agree with the view of the AO. Since the primary condition for exercise of jurisdiction u/s.263 of the Act viz., the order of the AO should be erroneous is absence in the present case, we are of the view that the order u/s.263 of the Act is unsustainable and the same is hereby quashed. The appeal of the Assessee is allowed. 8.3. In view of the above, we are satisfied that the A.O. has correctly allowed the deduction and there is no error in the orde .....

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