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TMI Blog2016 (4) TMI 747X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 - I.T.A.Nos.152 and 153/Mds/2015 - - - Dated:- 24-2-2016 - Shri Chandra Poojari, Accountant Member AND Shri Duvvuru RL Reddy, Judicial Member For The Appellant : Shri P. Kumar, C.A. For The Respondent : Shri A.V. Sreekanth, JCIT ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: Both the appeals filed by the same assessee are directed against different orders of the ld. Commissioner of Income Tax (Appeals) VI, Chennai, both dated 28.10.2014 relevant to the assessment years 2009-10 and 2011-12. The only effective ground raised in the appeal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n perusal of the profit and loss account and computation made by the assessee, the ld. CIT(A) has observed that the assessee has not included the provision for Fringe Benefit Tax of ₹.3,40,702/- under Explanation [I] to the section 115JB of the Act in the computation of income. The net profit declared by the assessee is required to be increased by the claim for provision of FBT for the purpose of computation of book profit under Explanation [I] to section 115JB of the Act. The provision for FBT is covered under clause (a) of Explanation [I] to section 115JB, being the amount of income tax paid or payable and provision therefor. The provision for fringe benefit tax is the provision for income tax under Chapter XII-H of the Income Tax Act. Therefore, since the assessee has not included the provision for FBT in the net profit for the purpose of computation of income under section 115JB of the Act, the Assessing Officer has rejected the claim of the assessee. The ld. CIT(A) further noticed that the Assessing Officer has committed an error while computing the income under section 115JB of the Act by taking the profit before tax of ₹.21,14,110/- and further making addition fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in favour of the assessee and decline to interfere in the order of the learned CIT(A) on this issue. 8. By agreeing with the above findings of the Delhi Benches of ITAT, the Hon ble Delhi High Court in the case of CIT v. Bhushan Steel Ltd. in ITA No. 324/2012 order dated 24.08.2012 has held as under: 8. This Court agrees with the reasoning employed and the conclusion reached in Vintage Distillers' case (supra). Section 2(43) defines tax as income tax chargeable under the Act, as well as FBT payable under section 115WA. Even though this definition of tax was amended after the introduction of the chapter on FBT, no corresponding amendment was made in respect of Explanation 1(a) of section 115JB. It is thus clear that for the purposes of Explanation 1(a) to section 115JB, income tax does not include FBT. FBT, therefore, need not be added back to net profit for computing book profit. Crucially Section 115 WA enacts that FBT is a tax in addition to income tax. 9. In Vintage Distillers's case (supra), the AO had, to compute book profit for the purposes of section 115JB, added an amount (provision for taxes) which included the provision for FBT. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Aggrieved, the assessee is in appeal before the Tribunal. 14. We have heard both sides, perused the materials on record and gone through the orders of authorities below. The assessee has incurred an expenditure of ₹.43,98,602/- for R D purposes and claimed deduction under section 35(2AB) of the Act by filing ledger accounts, etc. before the Assessing Officer. The Assessing Officer rejected the claim of the assessee on the ground that the assessee has not filed Form 3CL from DSIR to claim deduction under section 35(2AB) of the Act. Mere recognition of unit of R D purpose is not sufficient for allowing deduction and in the absence of approval from the prescribed authority, the ld. CIT(A) confirmed the disallowance made by the Assessing Officer. 15. In order to encourage R D initiatives by industry, and to make R D an attractive proposition, the Finance Bill 1997 introduced a sub-section (2AB) in Section 35 of the IT Act 1961. This sub-section provides for weighted tax deduction of a sum equal to two times of any expenditure incurred on scientific research (not being expenditure in the nature of cost of any land or building) in certain areas specified by section 35(2AB) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this recognition of in-house R D unit is not meant for tax exemption and quantum of tax exemption, development rebate will be governed by the Tax Law in operation from time to time. vi) Legislature has nowhere given any exemption to the R D units, which were already approved as in-house R D by Scientist of DSIR because the introduction of section 35(2AB) was made by the Finance Act, 1997 w.e.f.1.4.198 and specific procedure has been prescribed therein regarding approval by the prescribed authority. vii) No audit has been done by the prescribed authority before 31st October, of succeeding year. The CIT(A) allowed the assessee s appeal taking note of the fact that the assessee had filed Form 3CK before DSIR on 28.4.2008, which, though filed much after the close of the previous year under consideration but no time limit has been prescribed under law for filing this application. He also took note of the contents of the note sheet of DSIR obtained by the assessee under Right to Information Act. He noted from the same that the application for the year under consideration had been processed by the lower authorities but remained unattended by the concerned officer of DSIR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts of the present case. 18. Further, in the case of CIT v. Sandan Vikas (India) Ltd. [2011] 335 ITR 117 (Delhi), the point at issue before the Hon ble Delhi High Court was that the Assessing Officer refused to accord the benefit of the provisions of weighted deduction to the assessee on the ground that recognition and approval was given by the Department of Scientific and Industrial Research in February/September, 2006 i.e., in the next assessment year, against which, the Hon ble Court, by following the decision of the Hon ble Gujarat High Court in the case of CIT v. Claris Lifesciences Ltd. [2010] 326 ITR 251, held that it is nowhere suggested that date of approval only will be cut-off date for eligibility of weighted deduction on the expenses incurred from that date onwards and dismissed the appeal filed by the Revenue. Thus, the above case law has no application to the facts of the present case, where approval of the Prescribed Authority i.e. Secretary, DSIR to DGIT[E] in Form 3CL was not filed before the Assessing Officer for claiming deduction under section 35(2AB) of the Act. 19. In view of the above, we are of the opinion that with regard to claim of deduction under se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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