TMI Blog2022 (9) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... them. As It is not apparent either from the order of the ld. A.O or from the ld. CIT(A) s order what relevant evidences/materials were provided by the assessee in order to substantiate its claim for weighted deduction u/s 35(2AB) of the Act. Whether the assessee was able to justify the alleged consultancy services paid to the concerned three professionals and whether those can be brought within the status of in-house research and development facilities, no such evidence is apparent in the orders of the subordinate authorities and whether at all, the assessee had submitted such evidences before them. Thus matter should be restored to the file of the ld. A.O for adjudication as per law and as prayed for by the assessee. They should provide all evidences/documents to substantiate their claim of weighted deduction u/s 32(2AB) of the Act before the ld. A.O - Appeal of the assessee is allowed for statistical purposes. - ITA No. 436/PUN/2018 - - - Dated:- 15-9-2022 - Shri Inturi Rama Rao, Accountant Member And Shri Partha Sarathi Chaudhury, Judicial Member For the Appellant : Shri Kiran Sanmane For the Respondent : Shri M.G. Jasnani ORDER PER SHRI PARTHA SAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titute part of research and therefore only consultancy fees were paid to them for services rendered. As such, the consultation services provided by the above mentioned three individuals could not be accorded the status of in-house research and development facilities as stipulated u/s 35(2AB) of the Act for claiming weighted deduction. Therefore, the ld. A.O held that in respect of Rs. 44.65 lakhs incurred for acquiring consultancy services of the aforesaid three professionals the assessee is not eligible for weighted deduction u/s 35(2AB) of the Act. The ld. A.O further observed that as per report of the DSIR, New Delhi, the said expenditure of Rs. 44.65 lakhs incurred by the assessee for consultancy fees was not eligible for weighted deduction u/s 35(2AB) of the Act. 4. The ld. CIT(A) on this issue observed and held as follows: 6.3 I have considered the facts of the case and law apparent from records. The assessee has filed original return of income on 25-09-2013 declaring total income of Rs. NIL. The AO noticed that the assessee has claimed deduction u/s 35(2AB) in respect of revenue expenditure of Rs. 124.01 lakhs. The DSIR prescribed authority for issuing certificate in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Circle 1(1) Pune, order dated 15-05-2018. (b) ITA No. 1130/PUN/2017 for A.YL 2012-13 (Kirloskar Oil Engines Ltd. Vs. DCIT Circle 14, Pune, order dated 11-11-2021. 7. However, in the present case before us, having gone through the orders of the subordinate authorities, we observe that the ld. A.O noticed that the assessee had actually claimed Rs. 124.01 lakhs as revenue expenses. However, the DSIR have not found the expenses of Rs. 44.65 lakhs incurred for consultancy fees as eligible for weighted deduction u/s 35(2AB) of the Act in respect of these individuals employed for consultation purposes. In this regard, the ld. A.O had observed that those three professionals who do not constitute part of in-house research and therefore, only consultancy fees were paid to them for their services rendered and as such the consultancy services of those three individuals cannot be given the status of in-house research and development facilities as stipulated u/s 35(2AB) for weighted deduction and hence the claim was disallowed. It was upheld by the ld. CIT(A) on the ground that such certification was also not provided by the DSIR where the said amount of Rs. 44.65 lakhs incurred for con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Jaymala A. Naik and Mr. Nilesh Deshpande, appointed for the in-house Research Development unit of the assessee company were submitted by the assessee company during the respective proceedings before the A.O and before the Hon'ble CIT(A). 4. That, the assessee company had submitted the subject agreements entered into with the R D Professionals namely, Dr. Nitant Mate, Ms. Jaymala A. Naik and Mr. Nilesh Deshpande, appointed for the in-house Research Development unit of the assessee company before the A.O vide its letter dated 181-03-2015 submitted on 19-03-2015. 5. That, the assessee company had submitted the subject agreements entered into with the R D Professionals namely, Dr. Nitant Mate, Ms. Jaymala A. Naik and Mr. Nilesh Deshpande, appointed for the in-house Research Development unit before Hon'ble CIT(A) vide letter dated 05-12-2017 and submitted on same date. 6. That the subject agreements entered into with the R D Professionals namely, Dr. Nitant Mate, Ms. Jaymala A. Naik and Mr. Nilesh Deshpande, were already on record with the A.O as well as the CIT(A). Verification I, Mr. Uday Bhende, the above-named deponent do hereby veri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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