9911796707
TMI Blog2025 (5) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... cture and sale of industrial ceramics, abrasives and refractories filed its return of income for A.Y 2010-11 on 30.09.2010 declaring total income of Rs. 66,47,64,371/- after claiming deduction under Chapter VI A to the tune of Rs. 6,58,09,755/- which was subsequently revised to Rs. 65,65,73,121/- after claiming deduction under Chapter VI A to the tune of Rs. 7,40,01,005/-. During the course of assessment proceedings, AO noted that considering volume of investments, amount of dividend earned and expenditure disallowed by the assessee amounting to Rs. 39,602/- appears to be on the lower side. Hence, the AO made disallowance of Rs. 1,43,86,892/-. The assessee challenged the order of assessment before the CIT(A). However, following the judgement of Hon'ble Bombay High Court in the case of Godrej & Boyce Mfg. Co.Ltd. (328 ITR 81)(Bom), the CIT(A) sustained the addition made u/s. 14A r.w.r 8D of the Act. 4. Aggrieved by the CIT(A) order, the assessee is in further appeal before the Tribunal. The learned counsel for the assessee submitted that the assessee has its own sufficient interest free funds and not out of borrowed funds and thus, no borrowing cost incurred by the assessee to earn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on capital subsidy. 5.2 Aggrieved, the assessee is in further appeal before us. At the very outset, learned counsel for the assessee referred to the order of co-ordinate Bench of this Tribunal in the case of M/s. Dayal Steel Limited Vs. Addl.CIT dated 13.04.2017 in support of his claim that subsidy amount cannot be reduced from actual cost of capital asset for the purpose of computing depreciation. 5.3 Per contra, the Ld.DR supported orders of the lower authorities. 5.4 We have heard rival submissions and perused materials on record. We find that for the purpose of computing depreciation u/s. 43(1) of the Act, Patna Bench of this Tribunal in the case of Dayal Steel Limited Vs. Addl.CIT dated 13.04.2017 on identical issue has held as under: - "6.1 We also find that the Hon'ble ITAT Vishakhapatnam in the case of Sasisri Extractions Ltd. Vs. ACIT in reported in 307 ITR(A.T.) 127 has decided the issue in favor of assessee in the similar facts &circumstances by holding as under : "Held, allowing the appeal, that the scheme was intended to accelerate industrial development of the State and the incentive was given for setting up of industries in Andhra Pradesh. The amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d with Rule 8D(2) for the AY 2014-15 also on the similar direction to the AO to consider whether Rule 8D(2) is applicable to the year under consideration or not and to decide the said issue in accordance with law. This ground is allowed for statistical purposes. 8. The next ground raised by the assessee is in regard to entitlement of depreciation @ 60% on UPS, printers and routers etc. which form an integral part of computer system. 8.1 At the outset, the learned AR submitted that this Tribunal in the assessee's own case for earlier assessment year 2015-16 in ITA No.2803/Chny/2018 vide order dated 31.03.2021 has allowed depreciation @ 60% on UPS, printers and routers etc. which form an integral part of computer system by following the judgements of Hon'ble Madras High Court in the case of CIT vs. M/s.Cholamandalam MS General Insurance Company Ltd. in TCA Nos.93 to 100 of 2019 dated 28.01.2019 and the Hon'ble Delhi High Court in the case of CIT Vs BSES Yamua Powers Ltd (2013) 358 ITR 0047 (Del). 8.2 Per contra, learned DR relied on the orders of lower authorities. 8.3 We find that the Tribunal in the assessee's own case for earlier assessment year 2015-16 in ITA No.2803/Chny/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure entitled for weighted deduction, has submitted that addition made by the Assessing officer towards disallowance of claim of weighted deduction should be deleted and also relied on the decision of the Coordinate Benches of the Tribunal in the case of Ashok Leyland in ITA No.362/Chny/2024 dated 25.09.2024. 10.4 On the other hand, the ld. DR has argued that by conjointly reading the provisions of section 35(2AB)(1) and section 35(3) of the Act, it would be amply clear that even prior to the amendment made to Rule 6(7A) of the Income Tax Rules, the Prescribed Authority, i.e., the DSIR was empowered to limit the deduction under section 35 of the Act if the authority is of the opinion that the asset was not used solely for research purpose or the activity carried out does not result in enhancement of research facilities. He further submits that the case law relied on by the ld. Counsel for the assessee cannot be applied for the reason that the Tribunal, while passing order, has not discussed section 35(3) of the Act and prayed that the amount of disallowance made by the Assessing Officer based on the DSIR valuation should be upheld and dismiss the ground raised by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to furnish electronically its report (i) in relation to approval of in-house R & D facility in Part A of Form No.3CL, and (ii) quantifying the expenditure incurred in in-house R & D facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Act in Part B of Form No.3CL. In other words, the quantification of expenditure has been prescribed vide IT (Tenth Amendment) Rules, 2016 with effect from 01.07.2016 only. Prior to this amendment, no such power was with DSIR. 10.8. We have perused the case law relied on by the ld. Counsel for the assessee in the case of ACIT v. Crompton Greaves Ltd. (supra), wherein, by relying upon the order of Ahmedabad Benches of the Tribunal in the case of Sub Pharmaceutical Industries ltd. v. PCIT (2017) 162 ITD 484 and the order of the Pune Benches of the Tribunal in the case of Cummins India Ltd. v. DCIT [20180 96 Taxmann.com 576 (Pune - Tribunal), the Mumbai Benches of the Tribunal has observed and held as under: 12. It would also be apt to reproduce here-under the provisions substituted in clause (b) of sub rule (7A) of Rule 6, as brought in by the amendment effective from 01.07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e while deduction u/s. 35(1)(i) is allowed only at 100%. The conditions for allowing deduction u/s. 35(1)(i) of the Act and under Sec.35(2AB) of the Act are identical with the only difference being that the Assessee claiming deduction u/s. 35(2AB) of the Act should be engaged in manufacture of certain articles or things. It is not in dispute that the Assessee is engaged in business to which Sec.35(2AB) of the Act applied. The other condition required to be fulfilled for claiming deduction u/s. 35(2AB) of the Act is that the research and development facility should be approved by the prescribed authority. The prescribed authority is the Secretary, Department of Scientific Industrial Research, Govt. Of India (DSIR). It is not in dispute that the Assessee in the present case obtained approval in Form No.3CM as required by Rule 6 (5A) of the Rules. In these facts and circumstances and in the light of the judicial precedents on the issue, we are of the view that the deduction u/s. 35(2AB) of the Act ought to have been allowed as weighted deduction at 200% of the expenditure as claimed by the Assessee and ought not to have been restricted to 100% of the expenditure incurred on scientific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer in curtailing the expenditure and consequent weighted deduction claim under section 35(2AB) of the Act on the surmise that prescribed authority has only approved part of expenditure in form No.3CL. We find no merit in the said order of authorities below." 10.12 In view of the aforesaid reasoning and in the light of judicial pronouncements, cited supra, we hold that in the present case since the deduction is relating to the assessment year 2016-17 [where the amended law is applicable w.e.f. 1stday of April, 2016), which is prior to the Income Tax (Tenth Amendment) Rules, 2016, with effect from 01.07.2016 of Rule 6(7A) of the I.T. Rules], deduction under section 35(2AB) of the Act has to be allowed on the basis of the expenditure as recorded by the assessee in the books of account. Admittedly, the Assessing Officer has not disputed the correctness of the claim of expenditure incurred on scientific research. The contention of the DR that the amendment to Rule 6(7A) is procedural cannot be accepted, since the amended rule stipulates a condition that apart from approval of in-house R & D facility of assessee, the expenditure also has to be quantified by the prescribed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure prior to 01.07.2016, then, the intention to amend Rule 6 of IT Rules w.e.f. 01.07.2016 does not arise. Thus, the contention of the ld. DR stands rejected. 10.14 In view of the above facts and circumstances and in light of the above cited judicial pronouncements, we set aside the order of the CIT(A) on this issue and direct the Assessing Officer to allow the deduction as claimed by the assessee under section 35(2AB) of the Act. Accordingly, this ground raised by the assessee is allowed. 11. The appeal of the assessee for AY 2016-17 is partly allowed. ITA No.2868/Chny/2024 (AY 2018-19): 12. For the AY 2018-19, the assessee has raised four grounds of appeal- (i) Disallowance u/s. 14A r.w. Rule 8D amounting to Rs. 2,74,077/-; (ii) Disallowance of weighted deduction u/s. 35(2AB) amounting to Rs. 6,86,05,682/-; (iii)Disallowance of donation to Adhiparasakthi charitable medical education & cultural trust amounting to Rs. 1,87,500/-. 12.1 In regard to the first ground of appeal raised for AY 2018-19 i.e., disallowance u/s. 14A r.w. Rule 8D, we find that an identical ground raised by the assessee for AY 2010-11 in ITA No 2865/Chny/2024 has been dealt with us in para 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
