TMI Blog2022 (12) TMI 219X X X X Extracts X X X X X X X X Extracts X X X X ..... st free advances granted by the assessee and therefore, it would be presumed that the loans were advanced out of own funds. Concurring with the same, we remit this matter back to the file of Ld. AO for fresh adjudication in the light of aforesaid argument. The assessee is directed to substantiate its claim. This ground stand allowed for statistical purposes. The appeal of the assessee for AY 2015-16 stands partly allowed. Addition made u/s 2(22)(e) - assessee received interest free advances entities who had common shareholders - HELD THAT:- We find that the fact that the assessee is not a shareholder in the two entities, remain undisturbed before us and therefore, no such addition could have been made in the hands of the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal. Considering the fact that the time available to file the appeal fall within lockdown situation arising out of Covid-19 Pandemic, the delay is condoned in both the appeals and the appeals are admitted for adjudication on merits. 3. The Ld. AR, at the outset, submitted that the issue is recurring in nature and similar issue stood decided by this Tribunal for AY 2013-14, ITA No.82/Chny/2018 order dated 14.09.2022. The aforesaid position could not be controverted by Ld. Sr. DR. After due consideration, our adjudication would be as under. 4. During assessment proceedings of AY 2014-15, it transpired that the assessee incurred expenses of Rs.159.89 Lacs towards Project Expenses Bio Technology . Relying upon assessment order for AY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notification (page 9 of the paper book) which Ld. CIT(A) has referred to in the impugned order. On the basis of this letter, it could be concluded that the assessee was ready to undertake research on development of new products and had put in place the requisite machinery to carry out the same. 8. It could also be seen that the company sent samples of aquaculture feed supplement during November, 2013 and sold bio-products worth Rs.0.63 Lacs in the very next year. The research development is the preliminary step for developing the bio products which are ultimately developed and sold in the market. The details of the expenses incurred by the assessee are extracted in para-12 of the impugned order which would show that majority of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the business is commenced. The prescribed authority as defined in Rule 6(1) mean Director General (Income-tax Exemptions) in concurrence with Secretary, Department of Scientific and Industrial Research, Government of India. We have already held in para-9 that the assessee s business had already commenced long back and it was in the process of new product line only. 11. The case law of Hon ble Delhi High Court in Jay Engineering Works Ltd. V/s CIT (311 ITR 405) would support the case of the assessee wherein it was held that the nature of new business is not a decisive test for determining whether or not there is an expansion of an existing business. The nature of the business could be as distinct as a jewellery business and a business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. 12. The Ld. Sr. DR has relied on the decision of Hyderabad Tribunal in DCIT V/s Bharat Biotech International Ltd (2014) 42 Taxman.com 204 which held that the development activity in itself could not be considered as the business for the purpose of this section. However, upon perusal of the same, it was the finding of the Tribunal that product development expenses being interest on loan and cost of consumable, had nothing to do with scientific research and accordingly, it was held that the provisions of Sec.35(1)(i) or (iv) would have no application and the claim for deduction was to be rejected. We further find that this order has subsequently been amended and the appeals have been recalled for the purpose of decidin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds. Concurring with the same, we remit this matter back to the file of Ld. AO for fresh adjudication in the light of aforesaid argument. The assessee is directed to substantiate its claim. This ground stand allowed for statistical purposes. The appeal of the assessee for AY 2015-16 stands partly allowed. Revenue s Appeal for AY 2014-15 7. The only grievance of the revenue is deletion of addition made u/s 2(22)(e). The addition stem from the observation of Ld. AO that the assessee received interest free advances from M/s Aban Hotel and Resorts Ltd. and from M/s Aban Investment Private Ltd. These entities had common shareholders and accordingly, the sum of Rs.198.69 Lacs was added to the income of the assessee as deemed dividend u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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