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2015 (2) TMI 1348 - AT - Income TaxWeighted deduction @ 150% u/s. 35(2AB) on expenses incurred on clinical trial - Diversified views - one hand there are decisions of the Tribunal which are in favour of the Revenue and against the assessee and on the other hand we have a decision of the Hon ble High Court which is in favour of the assessee and against the Revenue - HELD THAT - The answer lies in the decision of the Tribunal Ahmedabad Bench in the case of Kanel Oil Export Inds 2009 (8) TMI 806 - ITAT AHMEDABAD-C wherein held A simple answer would be that the judgement of a High Court, though not of the Jurisdictional High Court, prevails over an order of the Special Bench even though it is from the Jurisdictional Bench of the Tribunal on the basis of the view that the High Court is above the Tribunal in the judicial hierarchy. The Tribunal further observed that this simple view is subject to some exceptions. It can work efficiently when there is only one judgement of a High Court on the issue and no contrary view has been expressed by any other High Court. Before us, the decision of the Tribunal in assessee s own case is against the assessee but as pointed out elsewhere the decision of the Hon ble Gujarat High Court in Cadila Healthcare 2013 (3) TMI 539 - GUJARAT HIGH COURT was pronounced later on and therefore the Tribunal did not have the benefit of the decision of the Hon ble Gujarat High Court. Now that we have the benefit of the decision of the Hon ble Gujarat High Court as mentioned hereinabove, we are following the decision of the Hon ble Gujarat High Court and accordingly we set aside the findings of the Ld. CIT(A) and direct the AO to allow the claim of weighted deduction u/s. 35(2AB) in respect of clinical trials as claimed by the assessee. Ground No. 1 is accordingly allowed. Weighted deduction in respect of (a) consultancy fees (b) patent fees as per patent Act and PCT and (c) patent filing fees not as per patent Act. - HELD THAT - The claim of weighted deduction in respect of consultancy fees and patent filing fees as per patent Act are concerned, the Tribunal has considered this issue in A.Y. 2007-08 2012 (9) TMI 43 - ITAT MUMBAI The Tribunal has considered this issue at para 33 of its order and at para-34 allowed the claim. As no distinguishing facts have been brought on record, respectfully following the decision of the Co ordinate Bench, weighted deduction on consultancy fees and patent filing fees as per patent Act are directed to be allowed. Patent filing fees which is not according to the patent Act and PCT, we find that the same is allowable as per the decision of the Hon ble Gujarat High Court in the case of Cadila Healthcare 2013 (3) TMI 539 - GUJARAT HIGH COURT Respectfully following the findings of the Hon ble Gujarat High Court, we direct the AO to allow the claim of weighted deduction on patent filing fees which is not as per patent Act and PCT. Ground No. 2 is accordingly allowed. Weighted deduction on eligible expenses incurred by the assessee but not considered by DSIR - HELD THAT - Before us it is claimed that the Tribunal had accepted assessee s contention for A.Y. 2007-08 that DISR certificate is only for certifying the facilities of Research and Development activity undertaken by the assessee and not a certificate for expenditure incurred by the assessee. After carefully perusing the orders of the authorities below and the factual matrix brought to our notice, in our considered opinion, these expenditures need to be allowed as and when approved by the DISR. We, accordingly, restore the matter back to the files of the AO with a direction to allow the weighted deduction as and when DISR approval is received. Ground No. 3 is treated as allowed for statistical purpose. Non allowance of deduction u/s. 80IB and 80IC of the Act on interest from customers of eligible unit - HELD THAT - This issue is squarely covered in favour of the assessee and against the Revenue by the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs Vidyut Corporation 2010 (4) TMI 229 - BOMBAY HIGH COURT There can be no dispute about the position that the price realized by the assessee from the sale of goods manufactured by the industrial undertaking constitutes a component of the profits and gains derived from the eligible business. The purchaser, on account of the delay in payment of the sale price also pays to the assessee interest. This forms a component of the sale price and is paid towards the lag which has occurred in the payment of the price of the goods sold by the assessee. On these facts, therefore, the payment of interest on account of the delay in payment of the sale price of the goods supplied by the undertaking partakes of the same nature and character as the sale consideration . The delayed payment charges consequently satisfy, together with the sale price, the first degree test Liberty India 2009 (8) TMI 63 - SUPREME COURT We, direct the AO to allow the claim of deduction in respect of interest from customers u/s. 80IB and 80IC of the Act in respect of the eligible units. Additional ground in respect of deduction u/s. 35(2AB) on gross expenditure without reducing (a) income from sale of products from R D work (b) income from sale of R D assets - HELD THAT - This claim is being made for the first time before the Tribunal and never claimed in the return of income. The Hon ble Jurisdictional High Court of Bombay in the case of CIT Vs Pruthvi Brokers Shareholders Pvt. Ltd. 2012 (7) TMI 158 - BOMBAY HIGH COURT has held that the assessee is entitled to raise additional grounds not merely in terms of legal submissions, but also additional claims to which claims not made in the return filed by it wherein the Hon ble High Court has followed the ratio laid down by the Hon ble Supreme Court in the case of National Thermal Power Co. Ltd. 1996 (12) TMI 7 - SUPREME COURT Drawing support from these decisions, the additional grounds are admitted. The matter is restored to the file of the AO. The AO is directed to verify the claim of the assessee and allow the same after verification in the light of the decision of the Tribunal in the case of ACIT Vs Wockhardt Ltd. 2012 (5) TMI 823 - ITAT MUMBAI
Issues involved:
1. Non-allowance of weighted deduction under section 35(2AB) on expenses incurred on clinical trial. 2. Non-allowance of weighted deduction on consultancy fees, patent fees, and patent filing fees. 3. Non-allowance of weighted deduction on eligible expenses not considered by DSIR. 4. Non-allowance of deduction under sections 80IB and 80IC on interest from customers of eligible unit. 5. Additional ground raised for deduction under section 35(2AB) on gross expenditure without reducing income from sale of products and R&D assets. 6. Condonation of delay in filing appeal for A.Y. 2008-09. Analysis: Issue 1: The main issue in the appeal for A.Y. 2009-10 was the non-allowance of weighted deduction under section 35(2AB) on expenses incurred on a clinical trial. The Tribunal considered past decisions and the explanation to the relevant clause. The Tribunal decided in favor of the assessee based on a subsequent decision by the Hon'ble Gujarat High Court, setting aside the findings of the CIT(A) and directing the AO to allow the claim of weighted deduction. Issue 2: Regarding the non-allowance of weighted deduction on consultancy fees and patent filing fees, the Tribunal followed a previous decision and allowed the claim. Similarly, for patent filing fees not as per the patent Act and PCT, the Tribunal relied on the decision of the Hon'ble Gujarat High Court and directed the AO to allow the claim. Issue 3: The non-allowance of weighted deduction on eligible expenses not considered by DSIR was also addressed. The Tribunal noted the certification by the auditor and directed the AO to allow the deduction once approved by DSIR, considering the nature of the expenses and the explanation provided by the assessee. Issue 4: The issue of deduction under sections 80IB and 80IC on interest from customers of an eligible unit was resolved in favor of the assessee based on a decision by the Hon'ble Jurisdictional High Court. The Tribunal set aside the CIT(A) order and directed the AO to allow the deduction. Issue 5: An additional ground was raised for deduction under section 35(2AB) on gross expenditure without reducing income from sales of products and R&D assets. The Tribunal admitted the additional ground, restoring the matter to the AO for verification and consideration based on relevant case law. Issue 6: For the appeal related to A.Y. 2008-09, the delay in filing was condoned after considering the reasons provided by the assessee. The Tribunal admitted the appeal and decided all grounds based on the detailed reasons given in the appeal for A.Y. 2009-10. In conclusion, both appeals were partly allowed for statistical purposes, with various issues related to deductions and allowances being resolved in favor of the assessee based on legal interpretations and relevant case law.
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