2015 (7) TMI 1340 - AT - Income Tax

Claim of deduction u/s 35(2AB) - HELD THAT - DR as well as ld. AR of assessee agreed before us the issue in dispute is squarely covered by the decision of ITAT in assessee s own case for AY 2009-10. On perusal of the order of the coordinate bench 2014 (10) TMI 171 - ITAT HYDERABAD the operative portion of which has been reproduced by ld. CIT(A) in her order it is very much clear that the issue in dispute has been decided in favour of assessee by holding that assessee is entitled for deduction u/s 35(2AB ). Therefore ld. CIT(A) having decided the issue by following the aforesaid order of Tribunal we do not find any infirmity in the impugned order of ld. CIT(A). Accordingly we uphold the same by dismissing the grounds raised by the department.

Summary

Issues:

1. Acceptance of assessee's claim of deduction u/s 35(2AB) of the Act.

Analysis:

The appeal before the Appellate Tribunal ITAT Hyderabad pertained to the order dated 06/02/2015 of the ld. CIT(A) - 3, Hyderabad for the AY 2011-12. The primary issue raised by the department was the acceptance of the assessee's claim of deduction under section 35(2AB) of the Income Tax Act. The assessee, a company engaged in the manufacturing and sale of pesticides, biofertilizers, and organic manures, had claimed a weighted deduction under section 35(2AB) for Research and Development (R&D) expenses. The Assessing Officer (AO) required the assessee to provide approval by the prescribed authority to substantiate this claim.

During the assessment proceedings, the AO noted that the letter submitted by the assessee from the Department of Scientific Research and Industrial Research (DSIR) was not in the prescribed form and was not signed by the Secretary of the Department. Consequently, the AO disallowed the deduction claimed under section 35(2AB). The assessee, however, contended that a similar issue for the AY 2009-10 was decided in their favor by the ITAT Hyderabad Bench. The ld. CIT(A) agreed with the assessee, directing the AO to allow the deduction subject to modification if the prescribed authority did not subsequently approve the expenditure claimed.

Upon hearing the parties and examining the records, the Tribunal found that the issue in dispute had already been decided in favor of the assessee by the ITAT for the AY 2009-10. The Tribunal upheld the decision of the ld. CIT(A) based on the precedent set by the ITAT in the earlier case, where it was established that the assessee was entitled to the deduction under section 35(2AB). Consequently, the Tribunal dismissed the grounds raised by the department and upheld the order of the ld. CIT(A), thereby dismissing the appeal of the department.

In conclusion, the Tribunal's judgment affirmed the assessee's entitlement to the deduction under section 35(2AB) based on the precedent set by the ITAT in a previous case, leading to the dismissal of the department's appeal.