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TMI Blog2022 (4) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to Rs. 1,10,54,154/- in assessment year 2012-13 and Rs. 16,89,81,370/- for the assessment year 2016-17. 3. For the assessment year 2012-13, the AO noted that the assessee has claimed deduction u/s. 35(2AB) of the Act for an amount of Rs. 12,90,40,773/- and it had filed Form 3CL certified & issued by DSIR, whereby it was found that the assessee is eligible for deduction for an amount of Rs. 11,79,85,276/- and accordingly, on the basis of certificate issued by DSIR in Form No. 3CL dated 21.07.2014, the AO restricted the deduction u/s. 35(2AB) of the Act, for an amount of Rs. 11,79,85,276/-. Thereby, the AO disallowed the excess amount claimed by the assessee at Rs. 1,10,54,154/- and added back to the returned income of the assessee. Aggrieved, assessee preferred appeal before CIT(A). 4. The CIT(A) also confirmed the action of AO by stating that "However the Assessing Officer is not prevented from optionally acting on the report to 1.7.2016. The distinction deserves to be made. It is normal on the part of the assessee to claim a deduction for which it is not entitled to. The order of the Assessing Officer in reducing the deduction, by acting on the contents of M/s. DSIR report, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the prescribed authority. Once such an agreement has been executed, under which recognition has been given to the facility, then thereafter the role of Assessing Officer is to look into and allow the expenditure incurred on in-house R & D facility as weighted deduction under section 35(2AB) of the Act. The above findings of the Pune Bench are contrary to the amended Rule of the Income Tax Rules, 1962, wherein, the prescribed authority i.e., DSIR was empowered in 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 Act in Part B of Form No. 3CL, when in the case of Electronic Corporation of India Ltd. v. ACIT (supra), the Hyderabad Bench of the Tribunal has observed as under: "17. As per the provisions of sec. 35(2AB) of Act as applicable to the relevant Assessment year, the expenditure incurred by the assessee in any approved in-house research facility, to the extent of approved by the prescribed authority, is entitled to weighted deduction of 150% of such approved expenditure. Therefore, the expenditure as approved by the DSI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of cost of any land or building) or in-house research and development facility as approved by the prescribed authority, then, they shall be allowed a deduction of a sum equal to one and a half times of the expenditure so incurred. The word used 'shall' in the above said provision would ordinarily mean that it should be understood in the context in which it is used and there cannot be departure in this regard. The said provision would also indicate that such expenditure as approved by the prescribed authority would be entitled for being allowed as a weighted deduction. There being no dispute to the fact that DSIR being the prescribed authority in the instant case, had issued the report in Form No. 3CL - Annexure - M certifying the total R & D expenditure (excluding land and buildings) as prescribed under Section 35(2AB) for a sum of Rs. 4,601.9 lakhs as against the claim of Rs. 5,957 lakhs made by the assessee in the return of income and as such, neither the second respondent nor first respondent could have sat in judgment over the said certificate issued by the prescribed authority. In other words, when the prescribed authority had certified the extent of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orts in Form 3CL shall be issued by the DSIR effective from 01.07.2016 which should include in "Part B" is to quantification of the expenses incurred by the tax payers in in-house research in terms of section 35(2AB) of the Act. Hence, the contention of the assessee has no legs to stand and is out rightly rejected. Thus, the entire claim of weighted deduction claimed by the assessee cannot be acceded to over and above the restriction made by the DSIR. In view of the above facts and circumstances and case law relied on, we are of the considered opinion that the Ld. CIT(A) has rightly directed the Assessing Officer to allow the correct amount of deduction under section 35(2AB) of the Act after taking note of the DSIR certificate dated 16.03.2017. Thus, the ground raised by the assessee stands dismissed." As the issue is fully covered against the assessee and in favour of Revenue by the Co-ordinate Bench of this Tribunal, respectfully following the same, we dismiss this issue of assessee's appeal in assessment year 2012-13. 8. As regards to the issue in assessment year 2016-17, the Ld. AR for the assessee stated that the disallowance of weighted deduction on research & developme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee in its computation. According to the Ld. AR, the issue is covered by the decision of Hon'ble High Court of Madras in the case of CIT v. Chettinad Logistics (P.) Ltd., (2017) 80 taxmann.com 221. He further stated that the Hon'ble Supreme Court has deleted the SLP filed by Revenue in the case of CIT v. Chettinad Logistics (P.) Ltd., [2017] 80 taxmann.com 221. 13. We noted that this issue is squarely covered in favour of assessee by the decision of Hon'ble Supreme Court in the case of Chettinad Logistics (P.) Ltd., supra, wherein it was held that section 14A cannot be invoked where no exempt income was earned by assessee in relevant assessment year. As the issue is squarely covered in favour of assessee, we delete the disallowance and direct the AO to recompute the income. Accordingly, this issue of assessee's appeal is allowed. 14. The next issue in this appeal of assessee in ITA No. 542/Chny/2019 for assessment year 2012-13 is as regards to the order of CIT(A) confirming the addition made by AO for an amount of Rs. 16,77,044/- on account of non-reconciliation of income as per Form 26AS and income as offered by assessee. 15. The AO during the cours ..... X X X X Extracts X X X X X X X X Extracts X X X X
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