2019 (4) TMI 1727 - AT - Income Tax

Disallowance u/s 263 - disallowance of weighted deduction under section 35(2AB) - HELD THAT - We find that the issue of disallowance of weighted deduction stands allowed by the Ld. CIT (A) , Tribunal , Hon ble High Court in SUN PHARMACEUTICAL INDUSTRIES LTD. 2017 (8) TMI 933 - GUJARAT HIGH COURT and Hon ble Supreme Court 2018 (7) TMI 1454 - SC ORDER holding that merely because the prescribed authority failed to send intimation In Form No. 3CL, would not be reason enough to deprive the assessee s claim of deduction under section 35(2AB) of the Act. In view of this matter, respectively following the order of above mentioned authorities, we do not find any infirmity in the order of CIT (A), accordingly, same is upheld. Exconsequenti, the Ground No. 1.1 to 1.5 of the Revenue are therefore, dismissed.

Summary

Issues:
Appeal against order of CIT (A) directing allowance of weighted deduction u/s. 35(2AB) despite conditions not fulfilled, based on ITAT order and Form 3CL non-submission.

Analysis:
The appeal by the Revenue was against the order of CIT (A) dated 30.08.2017 regarding Assessment Year 2009-10, arising from an assessment order passed under section 143 (3) read with section 263 of the Income Tax Act, 1961 by the AO. The grounds of appeal raised by the Revenue challenged the direction to allow the assessee weighted deduction u/s. 35(2AB) despite conditions not being fulfilled. The dispute arose from the non-submission of Form 3CL and the timing of Form No. 3CM issuance. The Revenue contended that the actual expenditure by the assessee was not verified. The assessee had initially declared a loss and book profit, which was assessed under normal provisions and section 115JB. The assessment was set aside under section 263, leading to a subsequent disallowance of the weighted deduction claim under section 35(2A) in the assessment order.

The CIT (A) allowed the weighted deduction based on a Tribunal order, which the Revenue contested. The Revenue's appeal against the Tribunal's order was dismissed by the High Court and the Supreme Court, thereby upholding the Tribunal's decision. The issue revolved around the non-submission of Form 3CL and the subsequent allowance of the weighted deduction. The Tribunal, High Court, and Supreme Court held that the failure to send Form 3CL did not justify denying the deduction under section 35(2AB). The Tribunal upheld the CIT (A)'s decision, dismissing the Revenue's grounds of appeal. The appeal by the Revenue was ultimately dismissed, affirming the decision of the CIT (A) to allow the weighted deduction claimed by the assessee.

In conclusion, the Tribunal upheld the CIT (A)'s decision to allow the weighted deduction under section 35(2AB) despite the Revenue's appeal against it. The non-submission of Form 3CL was not considered a sufficient reason to disallow the deduction, as established by the Tribunal, High Court, and Supreme Court rulings. The appeal by the Revenue was dismissed, affirming the allowance of the weighted deduction claimed by the assessee.