2021 (4) TMI 712 - AT - Income Tax

Revision u/s 263 - Deduction u/s 35(2AB) allowability - as per CIT-A although the case was selected for scrutiny to examine the deduction claimed u/s 35, 35(2AA) and 35(2AB), however, the Assessing Officer has not mentioned a single word about the allowability of the same in the body of the assessment order - HELD THAT - We find, the Tribunal in assessee s own case in the immediately preceding assessment year 2018 (4) TMI 1864 - ITAT DELHI has restored this matter to the file of Pr. CIT for deciding the issue afresh stating ssessee categorically stated before the ld.CIT that the ld. A.O. during the course of assessment proceedings u/s 143(3) did not call for any detail nor raised any query in regard to claim u/s 35(2AB). The ld. AR submitted that this information was erroneously given to the ld. CIT inasmuch as the Assessing Officer did make enquiry as was evident from his order sheet entry dated 03.02.2014 by which certain enquiry was conducted qua deduction u/s 35(2AB) of the Act. Without going into the authenticity of the claim of deduction, we find that the ld. CIT set aside the assessment order primarily on the assessee s submission that the Assessing Officer did not call for any detail nor raised any query. Since this position does not prima facie appear to be correct, we set aside the impugned order and remit the matter to the file of CIT for deciding it afresh. Respectfully following the decision of the Tribunal in assessee s own case for the immediately preceding assessment year, we deem it proper to restore this issue to the file of Pr.CIT for deciding the issue afresh - Decided in favour of assessee for statistical purposes.

Summary

Issues:
1. Assessment of total income under section 143(3) for AY 2012-13.
2. Examination of deduction claimed under sections 35, 35(2AA), and 35(2AB) of the Income Tax Act, 1961.
3. Verification of mandatory forms 3CM and 3CL for deduction under section 35(2AB).
4. Sale of fixed assets and conditions for weighted deduction under sub rule 7A(d) of rule 6(1) of Income Tax Rules.
5. Pr. CIT's order under section 263 deeming assessment order erroneous and prejudicial to revenue.
6. Appeal by the assessee challenging the Pr. CIT's order.

Analysis:

1. The appeal filed by the assessee challenged the assessment order for AY 2012-13, where the total income was determined at ?13,75,88,960 against the declared income of ?12,04,31,650.

2. The Pr. CIT found discrepancies in the assessment order related to the deduction claimed under sections 35, 35(2AA), and 35(2AB). The absence of mandatory forms 3CM and 3CL led to the disallowance of the claimed deduction under section 35(2AB).

3. The Pr. CIT highlighted the importance of complying with sub rule 7A(d) of rule 6(1) of Income Tax Rules regarding the sale of fixed assets for weighted deduction. The absence of verification and approval from the prescribed authority (DSIT) rendered the weighted deduction invalid.

4. The Pr. CIT invoked section 263, deeming the assessment order erroneous and prejudicial to revenue due to the lack of proper verification and compliance with necessary forms and rules for claiming deductions under section 35(2AB).

5. The assessee raised grounds of appeal challenging the Pr. CIT's order, asserting the genuineness of their claims and approvals received for R&D expenditure. The counsel argued that the Pr. CIT's decision was arbitrary and against natural justice.

6. The Tribunal, considering the arguments from both sides, found discrepancies in the assessment order and the lack of discussion on the claimed deductions. Following a similar decision in the assessee's preceding assessment year, the Tribunal restored the issue to the file of Pr. CIT for a fresh decision after providing an opportunity to the assessee.

7. Ultimately, the Tribunal allowed the appeal for statistical purposes, setting aside the Pr. CIT's order and directing a fresh assessment after due verification and compliance with legal requirements.

This detailed analysis covers the issues related to the assessment, claimed deductions, compliance with rules, and the judicial process leading to the final decision by the Tribunal.