TMI Blog2019 (9) TMI 404X X X X Extracts X X X X X X X X Extracts X X X X ..... nity to AO to verify Form no.3CL before allowing deduction under section 35(2AB). It is relevant to observe, in pursuance to the directions of Commissioner (Appeals), AO has not only verified the approval granted in Form no.3CL by the DSIR but having found the expenditure claimed by the assessee to be genuine has allowed deduction u/s 35(2AB). Commissioner (Appeals) has not violated the provisions of rule 46A. As regards the contention of the Revenue in respect of R D expenditure amounting to ₹ 15.31 lakh, we fully agree with the learned Commissioner (Appeals) that though the assessee may not be eligible to claim deduction under section 35(2AB) of the Act with regard to such expenditure, however, it certainly can claim deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 2,25,14,000, under section 35(2AB) of the Act called upon the assessee to furnish necessary details and also justify the deduction claimed. In response, it was submitted by the assessee that it has a in house Research Development (R D) facility approved by the prescribed authority. It was submitted, during the year under consideration, the assessee had incurred expenditure of ₹ 1,12,57,000, towards R D activity in the in-house R D facility and has accordingly claimed deduction @ 200% of the expenditure incurred as per section 35(2AB) of the Act. After considering the submissions of the assessee in the context of facts and material on record, the Assessing Officer observed that though the assessee has furnished copy of appro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as business expenditure. Therefore, he restricted the disallowance under section 35(2AB) of the Act to an amount of ₹ 15.31 lakh. However, he directed the Assessing Officer to allow deduction under section 35(2AB) of the Act after verifying the Form no.3CL. 5. The learned Departmental Representative submitted, assessee did not furnish Form no.3CL, during the assessment proceedings and it was submitted only before the first appellate authority. He submitted, without giving an opportunity to the Assessing Officer to verify Form no.3CL and submit his report, learned Commissioner (Appeals) allowed assessee s claim of deduction under section 35(2AB) of the Act which is in violation of rule 46A of the Income Tax Rules, 1962. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to claim it as deduction as business expenditure, though, deduction claimed under section 35(2AB) of the Act in respect of such expenditure may not be admissible. 7. We have considered rival submissions and perused the material on record. A reading of the assessment order would clearly reveal that the only reason for which the Assessing Officer has disallowed assessee s claim of deduction under section 35(2AB) of the Act is, it has not furnished the approval of expenditure by DSIR in Form no.3CL. The Assessing Officer has neither disputed the fact that assessee s in house R D facility is approved by the DSIR nor he has raised any doubt with regard to the genuineness of expenditure incurred of ₹ 1,12,57,000, in R D ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner (Appeals), the Assessing Officer has not only verified the approval granted in Form no.3CL by the DSIR but having found the expenditure claimed by the assessee to be genuine has allowed deduction under section 35(2AB) of the Act for an amount of ₹ 1,94,50,000, in order dated 11th October 2018. Therefore, in our view, learned Commissioner (Appeals) has not violated the provisions of rule 46A. As regards the contention of the Revenue in respect of R D expenditure amounting to ₹ 15.31 lakh, we fully agree with the learned Commissioner (Appeals) that though the assessee may not be eligible to claim deduction under section 35(2AB) of the Act with regard to such expenditure, however, it certainly can claim deduction of such exp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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