9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (4) TMI 747 - AT - Income TaxMAT - computation of income under section 115JB - Held that - Respectfully following the decision of the Tribunal in the case of ITO v. Vintage Distillers Ltd. (2010 (1) TMI 56 - ITAT DELHI-H ) as well as the decision of CIT v. Bhushan Steel Ltd. (2012 (8) TMI 1024 - DELHI HIGH COURT), we, set aside the order of the ld. CIT(A) and direct the Assessing Officer to exclude the fringe benefit tax for arriving the net profit for the purpose of computation of income under section 115JB of the Act. - Decided in favour of assessee Expenses claimed under section 35(2AB) - Held that - With regard to claim of deduction under section 35(2AB) of the Act, it is mandatory to file relevant approval of the Secretary, DSIR to DGIT E in Form 3CL after assessment of the in-house R&D for claiming allowable expenditure of capital and revenue nature. The approval in Form 3CL is nothing to do with recognition awarded by the DSIR. The DSIR, by recognizes the in-house R&D based on the mandate of the company/institutions. The R&D activities carried out by the company/ institutions by incurring various expenditures are required to be assessed separately by the Secretary, DSIR, which is entirely different from the recognition given by the DSIR. Under these facts and circumstances, we are of the considered opinion that in the absence of filing approval in Form 3CL by the assessee, the Assessing Officer is rightly disallowed the expenses claimed under section 35(2AB) of the Act. Once the assessee files the above approval in Form 3CL, irrespective of the date of approval, the Assessing Officer should allow the deduction under section 35(2AB) of the Act. - Decided against assessee
Issues Involved:
1. Confirmation of addition towards book profits under section 115JB of the Income Tax Act, 1961 for the assessment year 2009-10. 2. Disallowance of deduction under section 35(2AB) of the Income Tax Act, 1961 for the assessment year 2011-12. Issue-wise Detailed Analysis: 1. Confirmation of Addition Towards Book Profits under Section 115JB (A.Y. 2009-10): The assessee filed its return of income for the assessment year 2009-10 declaring NIL income and offered Rs. 17,73,408/- as book profit chargeable to tax under section 115JB of the Income Tax Act, 1961. The Assessing Officer (AO) processed the return under section 143(1) and determined the deemed income from books under section 115JB at Rs. 26,94,762/-. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who partly allowed the appeal, reducing the book profit to Rs. 21,41,110/-. The assessee further appealed to the Tribunal, arguing that the book profits should be accepted at Rs. 17,73,408/- as computed by the assessee. The main contention was that Fringe Benefit Tax (FBT) is an allowable deduction in the computation of book profit under section 115JB, as per CBDT circular 8 of 2005 and judicial precedents. The Tribunal examined the materials and noted that the provision for FBT of Rs. 3,40,702/- should not be added back to the net profit for computing book profit under section 115JB. The Tribunal referred to the decisions in CIT v. Bhushan Steel Ltd. and ITO v. Vintage Distillers Ltd., which held that FBT does not fall under the expression "income tax" for the purposes of Explanation 1(a) to section 115JB. Consequently, the Tribunal set aside the order of the CIT(A) and directed the AO to exclude the FBT provision of Rs. 3,40,702/- for arriving at the net profit for the purpose of computation of income under section 115JB. Thus, the ground raised by the assessee was allowed. 2. Disallowance of Deduction under Section 35(2AB) (A.Y. 2011-12): The assessee filed its return of income declaring a total income of Rs. 64,52,570/-. The AO completed the assessment under section 143(3), making an addition of Rs. 87,97,204/- due to the disallowance of deduction claimed under section 35(2AB). The AO observed that the assessee had not filed Form 3CL from the Department of Scientific and Industrial Research (DSIR), which is required for claiming such deduction. On appeal, the CIT(A) upheld the AO's disallowance, noting that mere recognition of the R&D unit from DSIR is not sufficient for allowing the deduction. The assessee needed to obtain approval in Form 3CL from the prescribed authority. The Tribunal reviewed the case and noted that for claiming deduction under section 35(2AB), it is mandatory to file the relevant approval in Form 3CL from the Secretary, DSIR to the DGIT[E]. The Tribunal cited the case of ACIT v. Meco Instruments P. Ltd., where the deduction was allowed due to the procedural delay by DSIR. However, in the present case, the assessee did not file any details regarding the application or approval in Form 3CL. Therefore, the Tribunal upheld the disallowance made by the AO and confirmed by the CIT(A). However, the Tribunal set aside the issue of allowability of expenses under section 35 to the AO for reconsideration, as the assessee had not raised this ground before the lower authorities. Conclusion: The appeal for the assessment year 2009-10 was allowed, directing the AO to exclude the FBT provision from the computation of book profit under section 115JB. For the assessment year 2011-12, the Tribunal upheld the disallowance of deduction under section 35(2AB) due to the absence of Form 3CL but remanded the issue of allowability of expenses under section 35 to the AO for reconsideration.
|
