2015 (9) TMI 702 - AT - Income Tax

Deduction u/s. 35(2AB) - disallowance in the instant case are as the approval is not in the prescribed form (Form 3CM) and the approval is not by the prescribed authority - Held that - In our clear view, except where and to the extent it leads to defeating the legislative intent, the assessee is obliged to comply with the prescription of the provision. The approval, the quantum of deduction being not the subject matter thereof, is to be in the prescribed form. Though apparently procedural, the same, it may be appreciated, has a substantive aspect to it in-as-much as the same only conveys that the in-house research and development facility under reference is an approved one. It is only this that would exhibit that all the conditions for granting the approval (which the tribunal in the assessee s case for A.Y. 2008-09 lays emphasis on) are met, and which can only be regarded as an essential requirement for the claim of deduction u/s. 35(2AB). As regards the prescribed authority, we are again in agreement with the tribunal, i.e., that if the concerned body (DSIR) has itself assigned the relevant function, i.e., for granting approval to in-house R & D centres, to Scientist G , the said authority can or is to be considered as having signed the relevant form for and on behalf of the Secretary, DSIR, the prescribed authority. In view of the foregoing, we, under the circumstances, only consider it fit and proper that the matter is restored back to the file of the A.O. for an adjudication afresh after allowing the assessee to present its case. The assessee s submissions dated 27.06.2011, 20.09.2011 and 12.10.2011 (PB pgs.121-128), we find relevant in this regard in-as-much as they do not bear any reference to any expenditure per payments to an outsider. Further, the assessee has, in pursuance of its application u/s.154 dated 21.11.2011, already secured deduction u/s.37(1) qua the revenue component of the relevant expenditure, so that we may not issue any separate direction/s qua the - Decided in favour of assessee by way of remand. Disallowance of deduction u/s.80-IB - profit of its new industrial undertaking set up in March, 2004 in the state of Himachal Pradesh - non-furnishing of the audit report in terms of section 80-IB(13) r/w s. 80-IA(7) - Held that - Assessee had vide its statement of income clearly specified its claim for the impugned deduction u/s.80-IB for the current year, being the 6th year of its operations, adverting to Form-10CCB, the prescribed form, also stating that the same would though not impact its taxable income for the year in the absence of a positive gross total income (GTI). The letter dated 20.09.2011, vide which the claim is said to have been made for the first time, is only by way of abundantly clarifying matters in view of the eminent nondisallowance of its claim u/s.35(2AB) and, in result, a positive GTI. The said objection, which also found approval by the ld. CIT(A), would, therefore, be of no moment. As regards the furnishing of the audit report in the requisite form, as afore-said, reference thereto has already been made per the return of income. Reference thereto is also made at para 26 of Form 3CD, i.e., the audit report prescribed u/s.44AD. Even assuming that the report stood omitted to be filed along with the return of income, the same has since been made good - Decided in favour of assessee. Disallowance of deduction u/s.80-G, i.e., qua donation to Prime Minister s National Relief Fund - denial of claim in the absence of the assessee furnishing the relevant receipt - Held that - The authorities below have denied the claim on the ground of non-furnishing the relevant receipt, without appreciating that no claim toward the same has been made by the assessee per its return of income itself in the absence of any positive income. The consideration of the claim by the Revenue on merits, thus, itself shows that, in contradiction to its stand qua deduction u/s.80-IB, a claim could be pressed subsequently where the conditions justify the same. The relevant receipt (No.929069 dated 01.12.2008) stands adduced by the assessee along with its application for admission of additional evidence dated 23.09.2014. We, therefore, in the circumstances, accept the assessee s prayer and admit the said additional evidence under Rule 29 of the Appellate Tribunal Rules, 1963. The matter would, accordingly, stand restored to the file of the A.O. to examine the assessee s claim on merits, allowing it a reasonable opportunity of being heard - Decided in favour of assessee by way of remand.

Summary

Issues:
1. Claim for deduction u/s.35(2AB)
2. Disallowance of deduction u/s.80-IB
3. Disallowance of deduction u/s.80-G

Claim for deduction u/s.35(2AB):
The appeal concerns the assessee contesting its assessment under section 143(3) of the Income Tax Act, 1961 for the assessment year 2009-10. The primary issue raised is regarding the claim for deduction under section 35(2AB) amounting to Rs. 2,88,32,702, which was disallowed by the Commissioner of Income Tax (Appeals)-II. The disallowance was based on various grounds, including the approval not being in the prescribed form (Form 3CM) and the expenditure involving payments to an external company for research services. The Appellate Tribunal found that compliance with the prescribed form and authority is crucial for claiming the deduction under section 35(2AB). The Tribunal emphasized that the approval signifies the in-house research facility's approval, which is essential for the deduction. As the approval by the DSIR was not in the prescribed form, the matter was remanded back to the Assessing Officer for fresh adjudication after allowing the assessee to present its case.

Disallowance of deduction u/s.80-IB:
The second issue revolves around the disallowance of deduction under section 80-IB concerning the profit of a new industrial undertaking set up in Himachal Pradesh. The Assessing Officer disallowed the deduction due to the non-furnishing of the audit report as required by the relevant sections. However, the Tribunal found that the claim for deduction was clearly specified in the income statement, and the audit report was subsequently filed. The objection raised by the Revenue was deemed meritless, and the disallowance was overturned based on the timely filing of the audit report and the clear claim for deduction.

Disallowance of deduction u/s.80-G:
The final issue pertains to the disallowance of deduction under section 80-G for a donation to the Prime Minister's National Relief Fund. Both authorities denied the claim due to the absence of the relevant receipt. The assessee sought to produce the receipt as additional evidence. The Tribunal accepted the additional evidence and remanded the matter to the Assessing Officer for a fresh examination of the claim. It was noted that the claim could be considered subsequently if the conditions justified it, contrary to the Revenue's initial stand. The assessee's appeal was partly allowed, and the matter was remanded for further assessment.

In conclusion, the appellate tribunal addressed the issues raised by the assessee concerning deductions under different sections of the Income Tax Act, emphasizing compliance with prescribed forms and authorities for claiming deductions and ensuring proper documentation to support the deductions claimed. The judgment provided detailed reasoning for each issue and remanded certain matters back to the Assessing Officer for fresh adjudication.