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TMI Blog2021 (6) TMI 455X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, Chennai dated 05.02.2020 in I.T.A.No.48/CIT(A)-6/2017-18, for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT(Appeals) erred in sustaining the disallowance of the claim of weighted deduction u/s 35(2AB) of the Act aggregating to Rs. 8,16,377 /- in the computation of taxable total income without assigning proper reasons and justification. 3. The CIT(Appeals) failed to appreciate that the reasons given in para 5 of the impugned order to sustain the addition were not correct and ought to have appreciated that there was no proper consideration of the approval obtained from the Ministry of Science & Technology, Government of India. 4. The CIT(Appeals) erred in confirming t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ional grounds/arguments at the time of hearing. 3. The brief facts of the case are that assessee company is engaged in the business of manufacturing of drugs and pharmaceuticals, filed its return of income for the assessment year 2015-16 on 24.10.2015, declaring total income of Rs. 13,26,465/-. The case was taken up for scrutiny and assessment has been completed u/s.143(3) of the Income Tax Act, 1961 (hereinafter the 'Act') on 22.09.2017 determining total income of Rs. 78,98,912/- by inter-alia making addition towards disallowance of excess claim of weighted deduction u/s.35(2AB) of the Act, addition towards difference in export turnover of Rs. 6,91,890/-, adhoc disallowance of 10% on printing & stationery and sales promotion expenses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icular expenditure is not eligible for weighted deduction but the same can be allowed u/s.37(1) of the Act, because said expenditure was necessarily incurred for the purpose of business of the assessee. 4.2 The ld.DR on the other hand strongly supporting order of the ld.CIT(A) submitted that the assessee has failed to file any evidences to prove how and why deduction can be allowed u/s.35(2AB) of the Act, without any quantification from the Competent Authority, i.e., DSIR, Ministry of Science and Technology, Government of India. 4.3 We have heard both the parties, perused materials available on record and gone through orders of the authorities below. In order to claim deduction u/s.35(2AB) of the Act, it is necessary for the assessee to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of information available with Income Tax Department and sales declared by the assessee in the P & L account, on the ground that the assessee has failed to file necessary reconciliation explaining difference in turnover. It was the claim of the assessee before the lower authorities that information relied upon by the AO to quantify difference in export turnover was not furnished to the assessee. The assessee further claimed that it has furnished all possible evidences to prove that there is no difference in turnover as per its record. 5.1 Having heard both sides and considered material on record, we find that the AO has made addition towards difference in export turnover on the basis of information available with the Department, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g heard both sides and considered material on record, we find that except stating that disallowance quantified by the AO is excessive and unreasonable, the assessee could not furnish any evidences to support claim of expenditure including bills and vouchers. At the same time, the AO has also failed to give any reason for making adhoc disallowance of 10% of expenses. Therefore, considering facts and circumstances of the case and also plea of the assessee that disallowance computed by the AO is excessive and unreasonable, we deem thought it fit to direct the AO to restrict adhoc disallowance to 5% of printing & stationery and sales promotion expenses. 7. The next issue that came up for our consideration from Ground No.7 of assessee appeal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .AR further submitted that the assessee has also furnished necessary evidences to prove that it has discontinued its business with certain parties for which, ledger extract of the parties were furnished to prove that it had written off amount received from such parties. Therefore, once the product line or party from whom assessee is dealing has discontinued its business, then obviously expenditure incurred for registration of such products needs to be charged off to the P&L account, because said expenditure is incurred wholly and exclusively for purpose of business of the assessee. 7.2 The ld.DR on the other hand strongly supporting order of the ld.CIT(A) submitted that the assessee has failed to file any evidence to prove that it had incu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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