2020 (11) TMI 972 - AT - Income Tax

Rectification of mistake - Allowability of weighted deduction u/s 35(2AB) - correct date of approval of the prescribed authority - HELD THAT - The question with regard to the allowability of the assessee to claim deduction u/s 35(2AB) for AY 2011-12 needs to be re-adjudicated as there is a mistake apparent on the face of the record in terms of noticing the correct date of approval of the prescribed authority u/s 35(2AB). The decision of the Tribunal for AY 2010- 11 rejecting the appeal of the assessee for allowing deduction u/s. 35(2AB) of the Act will not be affected in any manner. However, the findings in AY 2010-11 regarding date of application for grant of approval and date of approval will be adjudicated afresh while adjudicating the issue of deduction u/s. 35(2AB) of the Act for AY 2011-12 without being influenced in any manner whatsoever by the findings in AY 2010-11.

Summary

Issues:
- Allowability of weighted deduction u/s 35(2AB) for AY 2010-11 and AY 2011-12.

Analysis:
1. Allowability of Weighted Deduction u/s 35(2AB) for AY 2010-11:
- The Tribunal considered the case where the approval for weighted deduction u/s 35(2AB) was obtained after the end of the relevant previous year. The CIT(A) disallowed the deduction for AY 2010-11, emphasizing that approval was received after the relevant year. The Tribunal upheld this decision, distinguishing it from cases where approval was received during the same year. The Tribunal dismissed the appeal, stating that the approval was obtained after the relevant previous year, hence disallowing the deduction.

2. Allowability of Weighted Deduction u/s 35(2AB) for AY 2011-12:
- The Tribunal allowed the deduction for AY 2011-12 as the application for approval was made during the relevant previous year. The Tribunal cited decisions of High Courts to support this conclusion. The revenue challenged this decision, arguing that the approval was obtained after the end of the previous year. The Tribunal noted a mistake in recording the approval date and decided to re-adjudicate the issue for AY 2011-12. The Tribunal recalled the order for re-evaluation based on the correct approval date of 19.01.2011, directing a fresh adjudication without being influenced by the previous decision for AY 2010-11.

3. Conclusion:
- The Tribunal differentiated between the approval date and application date for weighted deduction u/s 35(2AB), emphasizing the importance of the approval date for eligibility. The decision for AY 2010-11 was upheld, while the decision for AY 2011-12 was recalled for re-evaluation based on the correct approval date. The Tribunal's detailed analysis and adherence to legal precedents ensured a thorough examination of the issues surrounding the allowability of weighted deduction under the Income Tax Act for the respective assessment years.