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TMI Blog2022 (8) TMI 83X X X X Extracts X X X X X X X X Extracts X X X X ..... points in dispute. 2) The Learned Commissioner (Appeals) erred in not allowing at least 100% of the Revenue, Expenditure for the short fall between the actual expenditure incurred and as approved by DSIR amounting to Rs.12,69,409/-and not considering the fact that R&D Expenditure incurred by the appellant is revenue expenditure incurred in the normal course of business and Form 3CL shall be looked into, only for the purpose of claiming weighted deduction. 3) The learned Commissioner (Appeals) erred in treating the one time premium paid for leasehold rights as a non - depreciable asset. 4) The Learned Commissioner (Appeals) erred in disallowing the depreciation claimed on Lease Hold Rights amounting to Rs.77, 85,255 on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of deduction u/s. 35(2AB) to Rs.2,68,28,000 and disallowed an amount of Rs. 25,40,763/-. 5. Before the ld.CIT(A), the assessee challenged the disallowances of Rs.25,40,763/-. It was submitted that out of the total Revenue Expenditure of Rs. 1,42,74,409/- and total Capital Expenditure of Rs. 4,09,973 incurred by the appellant, the DSIR certified an amount of Rs. 1,30,05,000/- as the Revenue expenditure and Rs. 4,09,973 as the Capital Expenditure eligible for weighted deduction. The shortfall amount not certified by DSIR is Rs. 12,69,409/- for Revenue expenditure incurred by the assessee company. 5.1 It was argued that the Assessing Officer has disallowed the entire weighted deduction of uncertified amount by DSIR i.e. 25,38,818 (200% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he essential requirements which must be satisfied before any deduction can be allowed under section 37 is that the expenditure must be expended or laid out wholly and exclusively for the purpose of the business. The words 'wholly and exclusively' both refer to the expenses incurred by the assessee for the purpose of his business. While determining as to whether the deduction claimed has been wholly and exclusively spent on such business, it is permissible to find out whether the amount has really gone for the purpose of business or not [CIT vs. S. Krishna Rao (1970) 76 ITR 664 (AP), CIT vs. Raman & Raman Ltd. (1969) 71 ITR 345 (Mad), Pioneer Spring & Steel Concern P. Ltd. vs. CIT (1982) 135 ITR 522 (Cal), D.N. SinhaPvt. Ltd. vs. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat such expenditure has been laid out wholly and exclusively for the purpose of business. In the instant case although there is no dispute to the fact regarding the incurring of such expenditure, the only reason of the ld.CIT(A) for disallowing the same is that the assessee never explained whether the business carried on by the assessee and the income generated by it has any relation or connection with such expenditure claimed. A perusal of the assessment order shows that assessee claimed R&D expenditure u/s.35(2AB) at Rs. 2,93,68,763/- as weighted deduction. As per Form 3CL, the R&D expenditure is eligible for deduction at Rs. 2,68,28,000/- and therefore, the AO held that the assessee has claimed excess R&D expenditure of Rs. 25,40,763/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined and the same is not acceptable as the lease period is 33 years and the benefit is extended to 33 Years. The lease premium paid is a capital expenditure and hence to be capitalized and the assessee is eligible for depreciation. The lease premium paid is nothing but a rent for the premises and it is neither a right nor an intangible asset. It is to be amortized for a period of 33 years. The amortized amount eligible is Rs. 17,73,638 for one year. The assessee can claim this amount for 33 years from the Asst. Year 2011-12." 12. In appeal, the ld.CIT(A) upheld the action of the AO by observing as under:- "The appellant stated that the annual lease rentals are a revenue expenditure, whereas the onetime premium paid is an intangible a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee should be allowed. 15. Th ld. DR on the other hand strongly relied on the order of the ld.CIT(A) and also relied on the various decisions. 16. We have considered the rival arguments made by both the sides and perused the record. We find the issue stands decided in faovur of the assessee by the decision of the Tribunal in assessee's own case in the immediately preceding assessment year, where the Tribunal has thoroughly discussed the issue by observing as under:- 5. The Revenue's vehement contention in support of the impugned disallowance is that the assessee ought to have amortized the same u/s.35 of the Act. We find no merit in the instant contention per se in view of the fact that neither there is any specific provision in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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