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TMI Blog2021 (9) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the CIT(A) may be vacated and that of the Assessing Officer be restored. 4. The appellant craves, leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal." 2. In this case, there is a delay of 21 days in filing of the appeal before the Tribunal. The Ld. DR for the Revenue has filed a letter dated 16.06.2021 for condonation of the delay of 21 days stating that the Hon‟ble Supreme Court of India, in Civil Original Jurisdiction, Suo Moto Writ Petition (Civil) No.3 of 2020 dated 27.04.2021 extended period of limitation till further order. The Ld. Counsel for the assessee did not raise any objection. After hearing the parties herein, we condone the delay and proceed to hear this appeal on merits. We further take note of the present pandemic situation where the movement of people are restricted and because of such practical situation, it is always not possible to follow the time of limitation regarding filing of appeal before various Forums. This fact was also observed and taken cognizance of by the Hon‟ble Supreme Court of India, in Civil Original Jurisdiction, Suo Moto Writ Pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourable Pune ITAT decision in the case of Cummins India Limited ( ITA No.309/PUN/2014, AY 2009-10) dated 15.05.2018. The honourable ITAT Pune has allowed this ground in favour of the appellant in the Assessment years prior to amendment of IT Rules w.e.f. 1.07.2016. Respectfully following the same, this ground of appeal is allowed." 6. The Ld. Counsel for the assessee submitted that the issue raised in the present appeal is squarely covered by the decision of the Pune Bench of the Tribunal in the case of Cummins India Limited Vs. DCIT, ITA No.309/PUN/2014 for the assessment year 2009-10 dated 15.05.2018 wherein the Tribunal has decided this issue in favour of the assessee. 7. The Ld. DR fairly conceded to these facts that the decision of the Tribunal referred hereinabove will cover the issue in favour of the assessee in this case. 8. We have heard the rival submissions and perused the materials available on record. We have also considered the order of the Tribunal dated 15.05.2018 (supra.). We observe the Pune Bench of the Tribunal in the case of Cummins India Limited Vs. DCIT (supra.) had an occasion to deal with the same issue under similar set of facts and circumstances vide P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3CL by the IT (Tenth Amendment) Rules, 2016 w.e.f. 01.07.2016, wherein column for certified amounts of expenditure had been inserted in the said form No.3CL. The learned Authorized Representative for the assessee further placed reliance on the ratio laid down by the Ahmedabad Bench of Tribunal in Sun Pharmaceutical Industries Ltd. Vs. Pr.CIT (2017) 162 ITD 484 (Ahmedabad - Trib.), wherein it has been held by the Tribunal that form No.3CL is merely a report in the form of intimation regarding approval of in-house R&D facility to be sent from prescribed authority's end to the Department and once the facility is approved in form No.3CM, the expenses incurred within the notified period have to be allowed under section 35(2AB) of the Act. He further pointed out that the said decision has been affirmed by the Hon'ble High Court of Gujarat in CIT Vs. Sun Pharmaceutical Industries Ltd. (2017) 250 Taxman 270 (Guj). In respect of decision of the Hon'ble High Court of Karnataka in Tejas Networks Ltd. Vs. DCIT (2015) 233 Taxman 426 (Kar), the learned Authorized Representative for the assessee pointed out that the said decision was clearly distinguishable on facts. The issue under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises after the form has been amended and not before that." 9. That the Tribunal on this issue has held and observed as follows : "38. We have heard the rival contentions and perused the record. The issue which arises in the present appeal is against the claim of deduction under section 35(2AB) of the Act i.e. expenditure incurred on Research & Development activity. For computation of business income under section 35 of the Act, expenditure on scientific research is to be allowed on fulfillment of certain conditions which are enlisted in the said section. Under various sub- sections of section 35 of the Act, the conditions and the allowability of expenditure vary. Sub-section (1) to section 35 of the Act deals with expenditure on scientific research, not being in the nature of capital expenditure, is to be allowed to research association, university, college or other institution; for which an application in the prescribed form and manner is to be made to the Central Government for the purpose of grant of approval or continuation thereto. Before granting the approval, the prescribed authority has to satisfy itself about the genuineness of activities and make enquiries in this reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in form No.3CM. Sub-rule (7A) provides that the approval of expenditure under sub-section (2AB) of section 35 of the Act, shall be subject to the conditions that the facilities do not relate purely to market research, sales promotion, etc. Clause (b) to sub-rule (7A) at the relevant time provided that the prescribed authority shall submit its report in relation to the approval of in-house R & D facility in form No.3CL to the DG (Income-tax Exemption) within sixty days of its granting approval. Under clause (c), the company at the relevant time had to maintain separate accounts for each approved facility, which had to be audited annually. Clause (b) to sub-rule (7A) has been substituted by IT (Tenth Amendment) Rules, 2016 w.e.f. 01.07.2016, under which the prescribed authority has to furnish electronically its report (i) in relation to approval of in-house R & D facility in part A of form No.3CL and (ii) quantifying the expenditure incurred on in-house R & D facility by the company during the previous year and eligible for weighted deduction under sub-section 2AB of section 35 of the Act in part B of form No.3CL. In other words the quantification of expenditure has been prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per procedure will approve the facility or otherwise and the assessee will be entitled to weighted deduction of any and all expenditure so incurred. The Tribunal has, therefore, come to the conclusion that on plain reading of section itself, the assessee is entitled to weighted deduction on expenditure so incurred by the assessee for development of facility. The Tribunal has also considered r. 6(5A) and Form No. 3CM and come to the conclusion that a plain and harmonious reading of Rule and Form clearly suggests that once facility is approved, the entire expenditure so incurred on development of R&D facility has to be allowed for weighted deduction as provided by s. 35(2AB). The Tribunal has also considered the legislative intention behind above enactment and observed that to boost up R&D facility in India, the legislature has provided this provision to encourage the development of the facility by providing deduction of weighted expenditure. Since what is stated to be promoted was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.3CL from year to year. Looking into the provisions of rules, it stipulates the filing of audit report before the prescribed authority by the persons availing the deduction under section 35(2AB) of the Act but the provisions of the Act do not prescribe any methodology of approval to be granted by the prescribed authority vis-à-vis expenditure from year to year. The amendment brought in by the IT (Tenth Amendment) Rules w.e.f. 01.07.2016, wherein separate part has been inserted for certifying the amount of expenditure from year to year and the amended form No.3CL thus, lays down the procedure to be followed by the prescribed authority. Prior to the aforesaid amendment in 2016, no such procedure / methodology was prescribed. In the absence of the same, there is no merit in the order of Assessing Officer in curtailing the expenditure and consequent weighted deduction claim under section 35(2AB) of the Act on the surmise that prescribed authority has only approved part of expenditure in form No.3CL. We find no merit in the said order of authorities below." 10. Therefore, there is categorical finding given by the Tribunal that the amendment brought in by the IT (Tenth Amendme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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