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TMI Blog2016 (4) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... SIR. Moreover, there was no mention about the approval in From 3CL communicated by the Secretary, DSIR to DGIT[E]. Mere recognition by DSIR shall not entitle the assessee to claim deduction under section 35(2AB) of the Act. In this case, the DSIR recognized the in-house R&D facility of Hosur unit, as per the written submission dated 21.12.2010 before the Assessing Officer. But, the Assessing Officer failed to call for the approval in Form 3CL to admit the claim of the assessee. Under these facts and circumstances, we set aside the order of the ld. CIT(A) on this issue and remit the matter to the Assessing Officer to call for (1) submission of report in the prescribed format [Form 3CM/3CK] to the Secretary, DSIR and (2) approval in Form 3CL communicated by the Secretary, DSIR to DGIT[E] and after verification of the same, the Assessing Officer should allow the claim of deduction under section 35(2AB) of the Act, if the assessee produces approval in Form 3CL communicated by the Secretary, DSIR to DGIT[E] to the unit(s), which was recognized by the DSIR, otherwise, no claim of deduction under section 35(2AB) of the Act could be allowed. - Decided in favour of assessee for statistic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s observed that the Puducherry unit of the assessee qualifies for deduction under section 80IB of the Act. During the period, the assessee has shown a net profit of ₹ 18,03,84,589/- from its business on a consolidated basis. In the computation of income, profit from Puducherry unit has been computed at ₹ 8,97,13,933/- out of which an amount of ₹ 5,43,66,171/- has been claimed as deduction under section 80IB of the Act. After verifying the details and submissions filed by the assessee, the assessment under section 143(3) of the Act was completed by making various additions. 3. The assessee carried the matter in appeal. After considering the facts, submissions of the assessee and also by considering the various decisions, the ld. CIT(A) partly allowed the appeal filed by the assessee. 4. Aggrieved, the assessee is in appeal before the Tribunal. 5. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The first issue raised before the Tribunal is with regard to apportionment of R D expenses between 80IB and non-80IB units. The Assessing Officer has observed that the Pondicherry unit of the assessee is qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is common business expenditure, is also equally attributable to all the three units. Since the R D is common business expenditure, the expenditure of R D is to be apportioned to different manufacturing units proportionate to their turnover. Accordingly, the ld. CIT(A) confirmed the action of the Assessing Officer in apportioning the R D expenses to various units proportionate to their turnover. 6. The Department of Scientific and Industrial Research, in order to promote research and development, identifies various institutions/companies and offers various rebates to boost the R D activities. To claim R D expenses as allowable deduction under section 35(2AB) of the Act, first of all, the DSIR has to recognize the in-house R D of the company. After obtaining recognition from DSIR, the company has to submit complete report of the R D activities and expenditure incurred for the same in the prescribed format to the Prescribed Authority i.e., Secretary, DSIR and after assessment of the report furnished by the assessee, the Secretary, DSIR will communicate approval in Form 3CL to the Director General of Income Tax [Exemption]. Based on the approval in Form 3CL, the assessee can claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances, we direct the Assessing Officer to verify the particulars and decide the issue in accordance with law after allowing sufficient opportunities of hearing to the assessee. Thus, the ground raised by the assessee is allowed for statistical purposes. 7. The second issue raised in the appeal of the assessee relates to confirmation of disallowance made under section 14A read with Rule 8D. It is not disputed that the total investments made by the assessee in the form of shares/funds is ₹ 99,61,87,000/- as on 31.03.2008 and earned dividend income of ₹ 5,17,68,002/- during the financial year 2007-08. It is also not disputed that the assessee has borrowed substantial amounts of funds during the financial year 2007-08 and interest amount paid on these borrowings stood at ₹ 1,01,000/-. Further, it was also not disputed that the main activity of the assessee is manufacturing electronic ignition systems and in addition the assessee is also investing and trading in shares/mutual funds, but the assessee has not maintained any separate sets of books for the investment activity and the manufacturing activities. All the funds are pooled up and utilized for var ..... X X X X Extracts X X X X X X X X Extracts X X X X
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