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TMI Blog2017 (9) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... n development of R&D facility has to be allowed for weighted deduction as provided by s. 35(2AB). In the light of above it cannot be said that the order of the AO was erroneous. Even if it were to be said that the view taken by the Courts and Tribunal are not correct, the said views were a possible view. Once the view taken by the AO is either correct or a possible view then the CIT in exercise of his powers u/s.263 of the Act cannot hold the order of the AO to be erroneous just because he does not agree with the view of the AO. Appeal of the Assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... t a reasonable opportunity of being heard shall be granted to the company before rejecting an application :" The deduction u/s 35(2AB) of the Act is allowed at a sum equal to two times of the expenditure incurred on scientific research. The condition required to be fulfilled is that the research and development facility should be approved by the prescribed authority. The prescribed authority is the Secretary, Department of Scientific Industrial Research, Govt. Of India (DSIR). The claim of the assessee for deduction as above was supported by a certificate of registration by DSIR dated 14.07.2010. The AO while completing the assessment allowed the claim of the assessee for deduction u/s 35(2AB) of the Act. 3. The CIT in exercise of his powers u/s 263 of the Act was of the view that the aforesaid order of the AO allowing deduction to the assessee u/s 35(2AB) of the Act was erroneous and prejudicial to the interest of the revenue. The CIT issued a show cause notice dated 10.03.2017 u/s 263 of the Act to the assessee on the ground that apart from the approval of DSIR the assessee is also required to file Form 3CM as stipulated under Rule 6(5A) of the I.T.Rules, 1962 (Rules), this was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal relied upon the judgment of Gujarat High Court in CIT vs. Claris Lifesciences Ltd. 326 ITR 251 (Guj). In its decision the Hon'ble Gujarat High Court held that the cut-off date mentioned in the certificate issued by the DSIR would be of no relevance. What is to be seen is that the assessee was in indulging in R&D activity and had incurred the expenditure thereupon. Once a certificate by DSIR is issued, that would be sufficient to hold that the assessee fulfills the conditions laid down in the aforesaid provisions. The Hon'ble Delhi High Court followed the decision of the Hon'ble Gujarat High Court and upheld the decision of the Tribunal. The Hon'ble Delhi High Court quoted the following observations of the Hon'ble Gujarat High Court and agreed with the said view: "7....The lower authorities are reading more than what is provided by law. A plain and simple reading of the Act provides that on approval of the research and development facility, expenditure so incurred is eligible for weighted deduction. 8. The Tribunal has considered the submissions made on behalf of the assessee and took the view that section speaks of : (i) development of facility; (ii) incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT, the Assessee is in appeal before the Tribunal. 7. The learned counsel for the Assessee that there was no dispute to the facts that the assessee had set up the Inhouse Research & Development facility in its Belgharia Unit and had incurred expenditure on scientific research. In respect of the said facility, recognition was granted by DSIR. It was also not disputed that the assessee all along proceeded on the premise that the said recognition by DSIR was sufficient for the purpose of claiming weighted deduction u/s.35(2AB) of the Act and the same was accepted in all the past assessments. It was his submission that the action of the CIT in resorting to the powers u/s.263 of the Act was purely based on the non furnishing of Form 3CM as stipulated in Rule 6(5A) of the Rules. It was submitted by him that whatever information is required for granting weighted deduction u/s 35(2AB) of the Act were all otherwise available in the Certificate of Recognition granted to the assessee by DSIR on submission of Form 3CK for registration u/s 35(2AB) of the Act before them. He also highlighted as to how the revenue for the first time in F.Y. 2015- 16 insisted upon production of Form 3CM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it its report in relation to the approval of the said facility to the Director General in such form and within such time as may be prescribed. Therefore, it would be too technical to hold that merely because the term (prescribed' has not been used in section 35(2AB)(i) it follows that there was no prescribed rules for the same. However. at the same time. absence of phrase 'prescribed' in section 35(2AB)(i) mitigates the assessee's default..................... A close reading of the said section read with rule 6 would reveal that nowhere any time has been prescribed within which the application is required to be filed by the assessee company. Further, nowhere, any condition has been prescribed regarding cut off date from which the approval could be made effective. Therefore, once the assessee company is granted approval it will apply till it is revoked with reference to all the assessment years. which come within the ambit of that period. Therefore, mere mentioning of 1-4-2007 in the order dated 28-8-2008 was of no consequence and the approval granted in Form 3CM was also applicable for assessment year 2005-06." (Emphasis supplied) 9. The learned counsel for the Assessee relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court and the Hon'ble Delhi High Court in the case of Claris Lifesciences Ltd., and Sadan Vikas (India) Ltd., have taken the view that on a plain and harmonious reading of rule 6(5A) and Form No. 3CM it would be appropriate to come to a conclusion once a research facility is approved, the entire expenditure so incurred on development of R&D facility has to be allowed for weighted deduction as provided by s. 35(2AB). In the light of the aforesaid judicial pronouncements, it cannot be said that the order of the AO was erroneous. Even if it were to be said that the view taken by the Courts and Tribunal are not correct, the said views were a possible view. Once the view taken by the AO is either correct or a possible view then the CIT in exercise of his powers u/s.263 of the Act cannot hold the order of the AO to be erroneous just because he does not agree with the view of the AO. Since the primary condition for exercise of jurisdiction u/s.263 of the Act viz., the order of the AO should be erroneous is absence in the present case, we are of the view that the order u/s.263 of the Act is unsustainable and the same is hereby quashed. The appeal of the Assessee is allowed. 12. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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