2012 (4) TMI 616 - AT - Income Tax

Summary

Issues involved: The judgment involves two appeals by the Revenue against the order passed by the CIT(A) pertaining to the assessment years 2004-05 & 2007-08.

Assessment Year 2004-05:

1. The assessee claimed deduction of &8377; 26,84,451/- towards research and development expenses u/s 35(2AB) of the Act. The Assessing Officer disallowed a portion of this deduction as the statutory requirement had not been fulfilled by the assessee.

2. The assessee objected to the disallowance, stating that the expenses were genuine and had been allowed in previous assessments. The AO disallowed the balance amount claimed by the assessee u/s 35(2AB) of the IT Act.

3. The CIT(A) held that the assessee was eligible for deduction u/s 35(2AB) and allowed a portion of the claimed amount as business expenditure. The Revenue appealed, but the Tribunal confirmed the CIT(A)'s order, stating that the actual expenses were allowable u/s 37.

Assessment Year 2007-08:

1. The first issue was the disallowance of the claim u/s 10(1) of the Act, where the assessee claimed &8377; 41,17,645/- as agricultural income. The AO denied this claim, treating it as business income. The Tribunal held in favor of the assessee based on previous decisions.

2. The second issue was the addition of &8377; 4,32,722/- on account of disallowance of interest claim. The AO added this amount back stating there was no nexus between the interest paid and the short term capital gains. The CIT(A) deleted this addition, confirming that only the interest component relating to taxable income had been claimed as a deduction.

3. The Tribunal dismissed the Revenue's appeals for both assessment years 2004-05 and 2007-08.

Conclusion: The Tribunal upheld the CIT(A)'s decision in both appeals, allowing deductions and dismissing the Revenue's claims.