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TMI Blog2012 (5) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... count of prior periods expenses. 5. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing." Assessee's appeal (ITA No. 6071/Del/10): 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred: i) in confirming the disallowance made by the Assessing Officer of the weighted deduction claimed under section 35(2AB) of the Income Tax Act, 1961 on research and Development Expenditure incurred during the period 1st April 04 to 20th September 2004; (ii) in confirming the disallowance made by the Ld. Assessing Officer erred grossly of the prior period items to the tune of ₹ 2,10,806/-. The above actions of the learned CIT(Appeals) being arbitrary, erroneous and unlawful must be quashed." 2. Brief facts are: Assessee company, incorporated in 1995, is engaged in the business of manufacturing and trading of agricultural tractors and its components. Original return was filed on 29-10-2005 declaring total income of ₹ 75,27,58,300/-. Thereafter the return was revised on 28-2-2007 at total income of ₹ 69,79,75,230/-, by claiming following deductions which remained to be considered in ori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excise duty benefit on export. 2.4. 80-IA/80-IB: The AO found that assessee had claimed deduction u/s 80-IB (for the ninth year) at ₹ 26,54,58,266/-, assessee to explain how the conditions prescribed by sec. 80-IA were satisfied. It was replied that: (i) Assessee was registered as SSI unit with the Department of Industries and started its production in A.Y. 1997-98, therefore the impugned year i.e. 2003-04 was 9th year for such claim. (ii) Though the assessee in subsequent years had become larger industry, however, in view of sec. 80-IA read with disability clause (2) [now 80-IB(2) & (3)], there is no express denial in case of Small scale industry which is initially held eligible and subsequently becomes medium scale or large scale industry. Thus the eligibility initially granted cannot be subsequently denied, though the SSI status of the assessee does not remain. (iii) Test of eligibility to sec. 80-IB/80-IA is to be determined in the initial assessment year and once the industrial undertaking fulfills all the prescribed conditions in first year, it becomes eligible to claim deduction for a total tax holiday period of ten years. Subsequently expansion in the status ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Hon'ble Court and Hon'ble ITAT Delhi had already decided this matter in favour of the assessee company for A.Y. 1998-99 to 2004-05. On a perusal of the above submissions of the appellant as well as the decision of ITAT referred to above in the case of the appellant itself for the earlier years, it is observed that the case of the appellant on the issue of allowance u/s 80IA/80-IB is squarely covered in it/s favour. That for the purposes of allowing deduction under this section it is only the initial year which should be considered and if the assessee fulfills the conditions in the initial year, as laid down in section 80-IA then the deduction would be allowed to the assessee for the entire block of period for which such deduction is envisaged under the said section. The ITAT has also observed that there is nothing in section 80-IA (now 80-IB) to show that the condition laid down in these sections should be reviewed year after year and disallowed to an assessee who is no more small scale industry and has become medium scale industry during the previous year relevant to assessment year. In view thereof, relying on the order of the ITAT (the last order given for AY 03-04) an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned counsel for the assessee in reply vehemently argues that the department has been agitating this issue about eligibility to sec. 80IA/80IBin every year. ITAT since 1998-99 till 2004-05 has been consistently holding that the assessee is eligible for deduction. Reliance is placed on ITAT order dated 15-5-2009, in which assessee's claim u/s 80-IA has been allowed for A.Y. 2003-04 and 2004-05 relying on earlier orders. It is pleaded that the facts and circumstances are similar in nature in this year, therefore, the ITAT judgment in assessee's own case may be followed. 4.1. Apropos the issue of duty draw back, ld. counsel contends that merely because assessee has effected the export, will not amount to automatic accrual of export benefits. The income can be accrued to assessee only when the assessee obtains a legal and enforceable right to claim it. Law provides eligibility of certain benefits on fulfillment of certain conditions. The same can be held to be accrued when the same is duly adjudicated by due process of law. Ld. CIT(Appeals) has rightly relied on Hon'ble Supreme Court judgments in the cases of Poona Electric Supply Co. Ltd. Vs. CIT (1965) 57 ITR 521; and E.D. Sassoon & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng deduction of weighted expenditure Since what is stated to be promoted is development of facility, intention of the Legislature by making above amendment is very clear that the entire expenditure incurred by the assessee on development of facility, if approved, has to be allowed for the purpose of weighted deduction. Thus, the reasoning given by the Tribunal was to be accepted; there was no scope for any other interpretation. Since the approval was granted during the previous year relevant to the assessment year in question, the assessee was entitled to claim weighted deduction in respect of the entire expenditure incurred by it under section 35(2AB). Therefore, no substantial question of law arose out of the order of the Tribunal and, accordingly, the appeal was to be dismissed." 4.4. It is pleaded that Hon'ble Gujarat High Court has clearly laid down that once research & development facility are approved the entire expenditure incurred for establishment of R & D facility will be allowable. 5. We have heard rival contentions and gone through the relevant material available on record. We proceed to decide the issues as under: 5.1. Eligibility U/s 80-IA/80-IB: The issue rai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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