TMI Blog2023 (10) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Admittedly, the AO has not examined the same. We notice that the provisions of sec. 35(2AB)(3) of the Act was amended with effect from 1.4.2016 by Finance Act, 2015, wherein it is stated that the assessee should fulfil such conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may be prescribed. We notice Rule 6(7A) was amended w.e.f 1.7.2016, i.e., after the amendment made in Sec. 35(2AB)(3) of the Act. Further, Form 3CL is one of the forms prescribed in Rule 6(7A)(b) of the Rules for quantifying scientific research expenditure by the prescribed authority. Since the rules prescribe for examination of the above said form, it is the duty of the AO to verify the same before allowing the deduction u/s 35(2AB) - Admittedly, the AO has not examined this aspect, even though it is not a fault upon the assessee. We agree with the view taken by PCIT on this issue that the AO has not carried out due enquiries or verification with regard to this issue. Accordingly, we uphold the order passed by Ld PCIT on this issue. Deduction allowed u/s 35(1)(i) - As is the view of the Ld PCIT that the said deduction was allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous and prejudicial to the interests of the revenue, since the Assessing Officer has allowed the following claims made by the assessee without carrying out due enquiries and verifications :- a) Deduction under section 35(2AB) of the Act : Rs. 32.60 crores b) Deduction claimed under section 35(1) of the Act : Rs. 1.41 crores c) Deduction claimed under section 80G of the Act : Rs. 26.72 lakhs Accordingly, he initiated revision proceedings under section 263 of the Act. 3. The view taken by Ld PCIT with regard to the above said three issues are summarized below:- (a) With regard to the deduction allowed under section 35(2AB) of the Act, the Assessing Officer has allowed the claim without obtaining Form No. 3CL. (b) With regard to the deduction allowed under section 35(1)(i) of the Act, the said deduction was allowed by the AO without obtaining mandatory Form 3CM and Form 3CL issued by DSIR. (c) With regard to the deduction allowed under section 80G of the Act, the claim has been made by the assessee in respect of the expenses incurred on Corporate Social Responsibility, which is disallowable under section 37(1) of the Act and hence deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax. What is prejudicial to the interest of the Revenue is explained in the judgment of the Supreme Court (headnote) : The phrase prejudicial to the interests of the Revenue has to be read in conjunction with an erroneous order passed by the Assessing Officer. Every loss of revenue as a consequence of an order of the Assessing Officer, cannot be treated as prejudicial to the interests of the Revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue, or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the Revenue unless the view taken by the Income-tax Officer is unsustainable in law. The principle which has been laid down in Malabar Industrial Co. Ltd. [2000] 243 ITR 83 (SC) has been followed and explained in a subsequent judgment of the Supreme Court in CIT v. Max India Ltd. [2007] 295 ITR 282. The principles laid down by the courts are that the Learned CIT cannot invoke his powers of revision under section 263 if the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asked the assessee through the notice issued u/s 142(1) of the Act about the break-up details of expenses only and did not mention about Form 3CL. Even though the above said form has to be furnished by the prescribed authority directly to the PCCIT/CCIT, yet it is the responsibility of the AO to verify as to whether the requirement of Rule 6(7A) has been satisfied or not, before allowing the claim u/s 35(2AB) of the Act. Admittedly, the AO has not examined the same. 8. The Ld A.R placed his reliance on the decision rendered by Hon ble Gujarat High Court in the case of Sun Pharmaceutical industries Ltd (85 taxmann.com 80)(Guj.)(HC) and certain other decisions in order to contend that the assessee cannot be penalized if the prescribed authority did not send Form 3CL to the revenue. However, we notice that the above said decisions have been rendered for the years prior to the amendment of Rule 6(7A)(b) of the Act, which now requires examination of Form 3CL before allowing deduction u/s 35(2AB) of the Act. Hence, we are of the view that the above said decisions cannot be taken support of for the year under consideration. 9. The Ld A.R also contended that the above said amendment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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