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TMI Blog2021 (2) TMI 716X X X X Extracts X X X X X X X X Extracts X X X X ..... section 35(2AB) of the Income Tax Act, 1961. 3. Brief facts of the case are that the assessee-company at the relevant time was engaged in manufacturing of fine chemicals. It has filed its return of income on 28.11.2014 declaring total income at Rs. 20,67,82,140/-. The case of the assessee was selected for scrutiny assessment and notice under section 143(2) was issued and served upon the assessee. A perusal of the record would indicate that the assessee has claimed deduction of Rs. 55.22 lakhs under section 35(2AB) of the Act. The ld. AO has perused this claim and observed that a perusal of the copy of form no. 3CL would indicate that the assessee has incurred an expenditure of Rs. 26.47 lakhs towards revenue and Rs. 0.35 lakhs towards capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ighted deduction claimed u/s. 35(2AB) of the Act. The appellant has duly furnished all the relevant details in support of its claim taken u/s. 35(2AB) of the Act. During the assessment proceedings, the Ld. AO has taken certain figures from Form 3CL and contended that the appellant has taken excess claim of Rs. 28,05,000/-, without in depth study of Form 3CL and Form 3CM. Consequently, an addition of Rs. 28,05,000/- has been made by the Ld. AO which is absolutely incorrect. In response to the same, we hereby produce facts and figures related to deduction claimed by the appellant u/s. 35(2AB) of the Act: Details of expenses occurred for R & D expenditures (Based on Form 3CL) are produced in the following table: Sr. No. Particulars A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Department of Scientific & Industrial Research has duly approved the figures and granted a certificate to the appellant company. From the above table, it can be verified that the appellant has claimed deduction u/s. 35(2AB) of the Act in accordance with an approval from Department of Scientific & Industrial Research. While referring to assessment order, It Is apparent that the Ld. AO has merely considered expenditure of Rs. 26.47 Lacs and compared the same with deduction claimed of Rs. 55,22,000/-, without verification of all the expenses Incurred for R & D Purpose. It seems that the action of the AO is not full proof and acted based on mere surmise and presumptions. Therefore, from the above discussion, we request your honour to k ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, disallowance made by the AO on this account is confirmed and Ground 2 is dismissed." 5. With the assistance of the ld. representatives, we have gone through the record carefully. There is no dispute with regard to the fact that facility of the assessee engaged in research activity has duly been certified by DSIR. Thus, there is no dispute with regard to the fact that deduction under section 35(2AB) of the Act is admissible to the assessee. The AO himself has granted this deduction. The dispute remains for quantification of the amount on which this deduction is to be granted. As per the AO, he has considered this expenditure pertaining to this research activity which is appearing in form 3CL i.e. forms submitted to DSIR. On the other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of expenditure submitted before the DSIR. Provision nowhere contemplates that assessee would claim deduction only those expenditure whose details has been forwarded to the DSIR for the purpose of availing certificate of approval for organization engaged in research activity. If an assessee independently demonstrates expenditure in the research activity (see the submission extracted above), then their nature is required to be looked into before taking a call for an addition. No such efforts were made by the Revenue authorities. Therefore, orders of the Revenue authorities are not sustainable. We allow this ground of appeal, and delete addition of Rs. 28,05,000/-. 6. In the result, the appeal of the assessee is allowed. Order pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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