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TMI Blog2021 (9) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... fic services rendered by the parties to whom the commission was paid along with the detail of their expenses and TDS on the transaction of commission payment - assessee placed copies of invoices raised by the commission agent, along with ledger account, acknowledgement of income tax return for A.Y. 2013-14 - assessee has also enclosed the copies of I.T. returns filed by these parties showing the amount of commission earned in their return of income - AO has not made any further verification, investigation and examination from the parties to whom the sales were made through the commission agents to disprove the facts reported by the assessee in its submission - AO has not demonstrated any material or information gathered to disprove the genuineness of the expenditure incurred on commission payment - Decided in favour of assessee. - ITA No. 28/Ahd/2017 - - - Dated:- 31-8-2021 - Shri Amarjit Singh, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Revenue : Shri L.P. Jain, Sr. D.R. For the Assessee : Shri Manish J. Shah, A.R. ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:- This assessee s appeal for A.Y. 2013-14, arises from order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s as under:- a. U/s. 32(2AB)- Revenue Exp ₹ 66,66,790 b. U/s. 35(2AB)- Capital Exp ₹ 12,02,052 c. U/s. 35(2)-Repairs Maintenance of R D Building ₹ 75,000 The Assessing Officer has also pointed out that the assessee has produced certificate issued by the DSIR dated 13th April, 2015 in respect of assessment year 2013-14 and the DSIR has approved revenue expenditure of ₹ 28,10,000/- and capital expenditure of ₹ 32,000/- for assessment year 2013-14. The assessee has claimed revenue expenses of ₹ 33,33,395/- and capital expenditure of ₹ 6,01,026/- on which weighted deduction at 200% has been claimed. The Assessing Officer was of the view that only the expenditure approved by the prescribed authority is allowable as weighted deduction at 200%. The Assessing Officer has restricted the claim of deduction of ₹ 56,20,000/- of revenue expenditure + ₹ 64,000/- capital expenditure totaling to ₹ 56,84,000/- as a weighted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, as under: i. Revenue expenditure of ₹ 10,05,03,198/- @ 150% - ₹ 15,07,54,797/-. ii. Capital expenditure of ₹ 1,27,94,490/- @ 150% - ₹ 1,91,91,735/-. The assessee, thus, claimed deduction of a sum of ₹ 16,99,46,532/-. The details of this expenditure has been filed at Assessee s Paper Book (APB for short), pgs. 93 to 100. It is the claim of the assessee that this expenditure was deductible u/s.35(2AB) of the Act in computing the total income @ 150% of the actual expenditure. The expenditure was incurred for the Kanjurmarg unit of the company; rather, the unit stood approved by the DSIR, in Form No. 3CM, as on 28.08.2008 (APB, pg. 88), as per the requirements of section 35(2AB) of the Act for the period from 01.04.2007 to 31.03.2009. The assessee s Auditor duly certified the genuineness of such expenditure and its eligibility for weighted deduction u/s. 35(2)(AB), as available at APB pgs. 93 to 100, as also by the tax auditor, as evident from APB pgs. 91 ^92. 7. It was the action of the DSIR in issuing Form No. 3CL (APB pgs. 89 90), dated 24.08.2010, quantifying the eligible expenditure at ₹ 11,04,63,000/-, as against that of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity and fulfils such conditions with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may be prescribed. (4) The prescribed authority shall submit its report in relation to the approval of the said facility to the Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General in such form and within such time as may be prescribed. (5) [***] (6) No deduction shall be allowed to a company approved under sub-clause (C) of clause (iia) of sub-section (1) in respect of the expenditure referred to in clause (1) which is incurred after the 31st day of March, 2008. 9. The operative phrase here is on in-house research and development facility as approved by the prescribed authority . , the word facility has been hereby show us to emphasis the point that it is the unit which requires approval of the prescribed authority under this provision. Further, in the memorandum, explaining the provision of section and the notes on the clauses issued at the time of insertion of section 35(2AB) in the Act, copies of both of which have been filed on record before us by the assessee, it has been clearly provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted in clause (b) of sub rule (7A) of Rule 6, as brought in by the amendment effective from 01.07.2016 as above: The prescribed authority shall furnish electronically its report,- (i) in relation to the approval of the in-house research and development facility in Part A of Room No. 3CL; (ii) quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Income Tax Act, 1961 in Part B of Form No. 3CL. 13. Hitherto, the provision was as follows: The prescribed authority shall submit its report in relation to the approval of in-house facility and development facility in Form No. 3CL to the Director General (Income-tax Exemptions) within sixty days of its granting approval. The above also makes it amply clear that prior to the amendment, i.e., upto 30.06.2016, it was not required to quantify the expenditure and it was only w.e.f. 01.07.2016 that this mandate has been put in place. 14. The year under consideration is A.Y. 2009-10 and, for this year, the amendment was not applicable. Therefore, the assessee is right in contending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 42,52,032/-, made u/s. 35(2AB) of the Act. In the above cited findings, the ITAT has also referred the decision of the ITAT, Ahmedabad in the case of Sun Pharmaceutical Ind. Ltd. Vs. Pr. CIT (2017) 162 ITD 484 as upheld by the Hon ble Gujarat High Court vide its decision reported at 250 taxman 270. In the light of the findings as supra and amendment to sub-section (3) of section 35 w.e.f. 1-04-2016 for furnishing of report, we consider that there is nothing before us on hand differs from the cases cited (supra) so as to take a different view on this issue. Therefore, since the issue on hand being squarely covered following the principle of consistency, we find merit in the submission of the assessee and allowed the claim of deduction. Therefore, this ground of appeal is allowed. Ground No. 2 (Disallowance of commission of ₹ 6 lacs u/s. 40A(2)(b) 8. During the course of assessment, the Assessing Officer noticed that assessee has paid commission to Prakash Udeshi HUF amounting to ₹ 1,50,000/- Ranjeet Sen HUF of ₹ 4 lacs and Sushanto Pramanik HUF of ₹ 2 lacs. The Assessing Officer stated that clarification given by the assessee regard ..... X X X X Extracts X X X X X X X X Extracts X X X X
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