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2013 (3) TMI 644 - AT - Income TaxDeduction u/s 80IB - Held that - CIT(Appeals) was justified in refusing to consider the claim of the assessee for deduction u/s. 80IB of the Act, because of the assessee s failure to furnish the return of income on or before the due date specified u/s. 139(1) of the Act. Deduction of capital expenditure u/s. 35(1)(iv) - Held that - The term scientific research has been defined in section 43(4)(i) of the Act. We are of the view that the order of the CIT(A), without a crucial finding about as to how the said expenses were related to the activities of scientific research as given in Annexure to this order and as to whether the aforesaid expenses can be said to be in the nature of scientific research, cannot be sustained. However, we are of the view that the matter should be restored to the Assessing Officer with a view to enable the AO to consider the claim of the assessee afresh in the light of the submissions made by the assessee before the CIT(A). Capital expenditure allowance u/s. 35D - Held that - Any expenditure incurred after commencement of business in connection with expansion of the undertaking or in connection with the set up of a new unit has to be allowed as a deduction over a period of five years from the previous year in which the expansion of the undertaking is completed or the new unit commences production or operation is to be allowed as deduction u/s.35D of the Act. The nature of expenses that will be allowed is set out in Sec.35D(2) of the Act. Since the issue has not been considered in its proper perspective with reference to provisions of section 35D of the Act, we deem it appropriate to set aside the order of the CIT(A) and remand the issue to the Assessing Officer for fresh consideration.
Issues Involved:
1. Delay in filing appeals before the CIT(A). 2. Imposition of penalty under Section 271(1)(c) of the Income-tax Act, 1961. 3. Claim for deduction under Section 80IB of the Act. 4. Deduction of capital expenditure under Section 35(1)(iv) of the Act. 5. Deduction under Section 35D of the Act for various expenses. Detailed Analysis: 1. Delay in Filing Appeals: The assessee faced a delay of about 840 days in filing appeals before the CIT(A). The reasons for the delay included improper service of orders, confusion due to the merger of EDL with the assessee, and inadequate representation by the previous AR. Despite the employee K. Krishna Bhatt collecting the penalty orders, he did not inform the company due to fear of consequences. The Tribunal found sufficient cause for the delay and condoned it, directing the CIT(A) to examine the imposition of penalty on merits. 2. Imposition of Penalty under Section 271(1)(c): The penalty was imposed for furnishing inaccurate particulars of income by claiming deductions under Section 35(1)(iv). The Tribunal noted that the penalty was related to the rejection of a claim and referred to the Supreme Court decision in Reliance Petro Products Ltd., indicating that mere rejection of a claim does not necessarily amount to concealment. The Tribunal directed the CIT(A) to examine the issue on merits. 3. Claim for Deduction under Section 80IB: The assessee's claim for deduction under Section 80IB was rejected by the revenue authorities due to late filing of the return of income. The Tribunal upheld the CIT(A)'s decision, citing the mandatory nature of Section 80AC, which requires the return to be filed on or before the due date specified under Section 139(1). The Tribunal found no merit in the assessee's appeal and dismissed it. 4. Deduction of Capital Expenditure under Section 35(1)(iv): The assessee claimed deduction for scientific research expenditure post-merger with EDL. The AO rejected this, assuming it was similar to previously disallowed claims by EDL. The CIT(A) allowed the claim, noting the differences in activities and the independent nature of the assessee's research. However, the Tribunal found the need for a detailed examination of the expenses and their relation to scientific research. The matter was remanded to the AO for fresh consideration. 5. Deduction under Section 35D: The assessee claimed deduction for various expenses under Section 35D, which were initially rejected by the AO as capital in nature. The Tribunal noted that Section 35D allows for such deductions over five years and found that the CIT(A) had erred in assuming the expenses were related to share capital increase. The Tribunal remanded the issue to the AO for a fresh examination in line with Section 35D provisions. Conclusion: The Tribunal allowed the appeals for statistical purposes, directing the CIT(A) and AO to re-examine the issues on merits and in accordance with the law. The appeals involving Section 80IB were dismissed due to non-compliance with statutory deadlines, while issues under Sections 35(1)(iv) and 35D were remanded for detailed examination.
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