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TMI Blog2018 (8) TMI 663X X X X Extracts X X X X X X X X Extracts X X X X ..... of Ld CIT that A.O. has not enquired is not factually correct as Form 3CM is on record (even though not stated as 3CM but a registration by DSIR as prescribed). We are satisfied that the A.O. has correctly allowed the deduction and there is no “error” in the order passed by A.O. u/s 143(3). Once a research facility is approved, entire expenditure incurred on Department of R & D has to be allowed weighted deduction as provided u/s 35(2AB). Filing of Form 3CL by assessee does not arise. - Revision order quashed - Decided in favor of assessee. - I.T.A. No. 942/HYD/2017 - - - Dated:- 20-7-2018 - Shri B. Ramakotaiah, Accountant Member And Shri Challa Nagendra Prasad, Judicial Member For Assessee : Shri S.P. Chidambaram Shankar Kabs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be given. The A.O. allowed this allowance, without complying the related provisions of law, as mentioned above. Since the Assessing Officer has not brought anything on record about this allowance, the same has to be treated as non-application of mind. This non-application of mind is to be treated as error as held by the Hon ble Supreme Court in the case of M/s. Malabar Industrial Limited . 3. When the show-cause noticed was issued, assessee sought oneweek time to reply as the assessee-company got merged with M/s. H.M. Clause India Private Ltd., and filed copies of the order of Hon ble Delhi High Court in support and information has to be obtained from earlier management. 4. Learned CIT-2, without considering that the company was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nds on the issue of jurisdiction of the non-existing company, these grounds are not argued as the assessee wants the issues to be considered on merits. 6. It was the submission that the A.O. in the course of scrutiny proceedings has enquired about the claim u/s 35(2AB) and referred to the questionnaire issued by A.O. dated 28.04.2014 (Item 5 in Annexure) and replies by assessee dated 26.05.2014 (Item 23 in page 42 of Paper Book) continuation letter dated 29.05.2014 (Item 30 in page 45) and copy of ledger account (Item 52 in page 50). It was the submission of that the A.O. has enquired and allowed the claim. With reference to the finding of the Ld. CIT that the Form 3CM and 3CL are not filed which are mandatory, it was the submission that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough not stated as 3CM but a registration by DSIR as prescribed). 8.1. Coming to the issue of filing of Form 3CL, the Rule 6(7A) is as under:- [(7A) Approval of expenditure incurred on in-house research and development facility by a company under sub-section (2AB) of section 35 shall be subject to the following conditions, namely :- (a) The facility should not relate purely to market research, sales promotion, quality control, testing, commercial production, style changes, routine data collection or activities of a like nature; [ (b) The prescribed authority shall furnish electronically its report,- (i) in relation to the approval of in-house research and development facility in Part A of Form No.3CL; (ii) qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... research and development facility shall not be disposed of without the approval of the Secretary, Department of Scientific and Industrial Research.] The Form is to be sent by DSIR to DIT (E). It is an internal mechanism before two Government Departments on which assessee has no role or control, except filing the necessary application with DSIR which assessee complied. So, non-filing of Form 3CL by assessee does not arise in such a situation. 8.2. Coordinate Bench at Kolkata on similar facts while examining jurisdiction u/s 263 has considered and held as under in the case of Texaco Rail Engineering Ltd (supra):- 11. We have given a very careful consideration to the rival submissions. We are of the view that in the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 8.3. In view of the above, we are satisfied that the A.O. has correctly allowed the deduction and there is no error in the order passed by A.O. u/s 143(3). Once a research facility is approved, entire expenditure incurred on Department of R D has to be allowed weighted deduction as provided u/s 35(2AB). Filing of Form 3CL by assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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