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TMI Blog2022 (1) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... rn of income on 29.11.2014 of Rs. 4,78,05,890/-. During the course of assessment proceeding the ld AO noted that it has claimed deduction of Rs. 9,54,80,025/- u/s 35(2AB) of the Act as weighted deduction of R&D Centre expenditure. The form No. 3CL dated 08.05.2015 was furnished by the assessee claiming R&D expenditure eligible for weighted deduction @ 200% amounting to Rs. 468.98 lakhs. The ld AO considered that the amount of R & D Expenses claimed is Rs. 4,77,40,012/- whereas the sum mentioned in Form No. 3CL is only Rs. 4,68,98,000/-. He further noted that the assessee has not furnished Annexure IV along with return of income in Form No. 3CL which was furnished on 08.05.2015. Therefore the deduction u/s 35(2AB) claimed by the assessee wherein, such expenditure is statutorily approved by DSIR in Form No. 3CL only on 08.05.2015. The ld AO noted that CAG report No. 5/2015 states that the submission of Form No. 3CL should proceed the date of filing of return of income and then only the assessee could have claimed such sum. Accordingly, he disallowed the weighted deduction u/s 35(2AB) of Rs. 9,54,80,025/- and computed total income of the assessee vide order dated 29.11.2016 passed u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Industrial Research has approved capital expenditure other than land and building of Rs. 113.73 lakhs and recurring expenditure of Rs. 356.15 lakhs only. The DSIR has reduced recoveries to the extent of Rs. 90,000/- from the said approval, as a result, the Department of Scientific and Industrial Research has approved the total expenditure of Rs. 468.98 lakhs as against the claim of 477.39 lakhs submitted by the appellant before of Department of Scientific and Industrial Research. It is also seen from the Form 3CL submitted by the Department of Scientific and Industrial Research to the DG (Exemption) that the appellant has entered into an agreement with the DSIR for cooperation, research and development facility and for audit of their accounts maintained for such facility. During the course of assessment proceedings, the AO has observed that The claim of the appellant made u/s 35(2AB) suffers following lacunae: "(i) The amount claimed is Rs. 4,77,40,012/- where as the amount mentioned in Form 3CL is Rs. 4,68,98,000. (ii) The assessee had not furnished Annexure IV i.e. on what date it had made the claim of for the amount of deduction for the year under consideration. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 780 2013-2014 73,311,664 The appellant has submitted that Assessing Officer has quoted the conditions for claim of deduction as stated in Section 35(2AB) and in sub-section (3) which have been reproduced in the assessment order. The appellant contended that Section quoted by the AO in the assessment order is amended 35(2AB)(3) Section which is applicable from 01.04.2016 and the same is not applicable for the assessment year under consideration. The pre-amended section 35(2AB)(3) which is applicable for AY 2014-15 is reproduced hereunder: "No company shall be entitled for deduction under clause (1) unless it enters into an agreement with the prescribed authority for co-operation in such research and development facility and for audit of the accounts maintained for that facility". As per the pre-amended section, the conditions prescribed are that appellant has to enter into an agreement with Department of Scientific and Industrial Research (appropriate authority) and audit of accounts maintained for such approved scientific research facility. It is seen that the appellant has entered into an agreement with Department of Scientific and industrial Research and has also agr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o develop world class products in terms of reliability & durability through techniques such as design for 6 signand Multiple Environment Over Stress Testing (MEOST). 4. Address at which such Research & Development facility is/are located: 49 KM Mile Stone, Delhi - Mathura Road, Village Prithla - 121102, District Palwal (Haryana) 5. Ref. No. and Date of the application : NO. Nil, dated 24th July, 2012. The above Research & Development facility is approved for the purpose of section 35(2AB) from 01.04.2012 to 31.03.2014." In the said letter, the research and development program undertaken by the appellant in its in-house R&D centre for new products and improvement in the existing products has been defined. The above letter clearly shows that appellant was approved for the purpose of section 35(2AB) till 31.03.2014 and accordingly appellant had made claim u/s 35(2AB) for the revenue as well as capital expenses incurred by it on its approved research and development facility duly approved by DSIR. The appellant has further submitted that documents of Annexure IV could not be filed before the AO as the same were not traceable at the time of assessment and appellant had aske ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which includes 113.73 lakhs for capital expenditure and 355.25 lakhs for recurring expenditure. AO is therefore, directed to allow weighted deduction to the appellant @ 200% of the expenditure approved by the DSIR. Accordingly, this ground of the appeal of the appellant is allowed." 5. Therefore, now the revenue is in appeal against the relief granted by the ld CIT(A) and assessee is in appeal against non allowance of deduction u/s 37(1) of the Act of the sum of Rs. 8,42,000/- which was neither allowed u/s 35(2AB) and nor u/s 37(1) of the Act. 6. The ld AR vehemently submitted that the provision of section 35(2AB) provides deduction on scientific expenditure incurred by the assessee wherein, the assessee gets deduction @200% of the in house research facilities approved by Secretary, Department of Scientific and Industrial Research, Govt. of India. It was further submitted that the introduction of Rule 6(7A) of the Act which provides for several conditions for deduction as it stood for the impugned assessment order only provides that a prescribed authority shall submit its report within 60 days of granting of the approval. It was further stated that amendment in Rule 6(7A) has b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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