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TMI Blog2024 (2) TMI 827X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Appellant : Sh. Salil Kapoor, Adv.; Ms. Ananya Kapoor, Adv.; Utkarsa Kumar Gupta, Adv. For the Respondent : Sh. Vivek Kumar Upadhyay, Sr. dR ORDER PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals)-22, New Delhi, dated 26.02.2018, pertaining to the assessment year 2014-15. The assessee has raised following grounds of appeal: 1. That the order of the Ld. AO as well as CIT(A) is bad in law and against the facts of the case. 2. That the Ld. AO as well as CIT(A) was not justified in disallowing deduction of Rs. 9,61,259/- out of research and development expenses claimed u/s 35(2AB) of the I.T. Act. 3. That the assessee craves right to amend, delete, substitute any one or more of the grounds of appeal at the time of hearing. 2. The only effective ground is against disallowance deduction of Rs. 9,61,259/- out of research and development expenses claimed u/s 35(2AB) of the I.T. Act, 1961, hereinafter referred to as the Act . Facts giving rise to the present appeal are that the assessee, a company , filed its e-return on 29.11.2014 declaring total in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity for which the deduction is claimed. Therefore, in order to claim a deduction, an assessee has to enter into an agreement with prescribed authority and also agree to the conditions regarding maintenance and audit of accounts. The prescribed authority has to furnish of reports in such manner as may be prescribed. Therefore, the deduction u/s 35(2AB) is to be limited to the expenditure approved by the prescribed authority (in this case secretary, DSIR) in form 3CL. Therefore, ground no. 2 of the appeal is dismissed. 5.1 However, under identical facts the Tribunal in A.Y. 2013-14, after considering the submissions, had decided the issue in favour of the assessee by following the binding precedent. For the sake of clarity relevant contents of the order of the Tribunal for A.Y. 2013-14 in ITA no. 8160/Del/2018 is reproduced hereunder: 7. We find that the issue in dispute is already squarely addressed by the Hon'ble Jurisdictional High Court in the case of CIT vs Sandan Vikas (India) Ltd reported in 335 ITR 117 (Del) wherein it was held as under:- 1. The assessee claims that it is engaged in the business of manufacturing of automotive air conditioning and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reupon. Once a certificate by DSIR is issued, that would be sufficient to hold that the assessee fulfills the conditions laid down in the aforesaid provisions. The discussions, which is undertaken by the Gujarat High Court while interpreting the aforesaid provisions, is extracted below: 7. The lower authorities are reading more than what is provided by law. A plain and simple reading of the Act provides that on approval of the research and development facility, expenditure so incurred is eligible for weighted deduction. 8. The Tribunal has considered the submissions made on behalf of the assessee and took the view that section speaks of: (i) development of facility; (ii) incurring of expenditure by the assessee for development of such facility: (iii) approval of the facility by the prescribed authority, which is DSIR; and (iv) allowance of weighted deduction on the expenditure so incurred by the assessee. 9. The provisions nowhere suggest or imply that research and development facility is to be approved from a particular date and, in other words, it is nowhere suggested that date of approval only will be cut-off date for eligibility of w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Banco Products (India) Ltd vs DCIT reported in 405 ITR 318 (Guj) 9. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we hold that the assessee would be entitled for deduction u/s 35(2AB) of the Act for the expenditure incurred from 1.4.2012 to 31.3.2013. Accordingly, the grounds raised by the assessee on merits are allowed. 5.2 The present case is distinguishable on facts as in the present case the issue is whether the expenditure claimed by the assessee is required to be approved by the DSIR. So far issue related to approval by the DSIR there is no quarrel in the year under appeal. The only dispute is whether the expenditure claimed by the assessee ought to have been allowed in totality dehors allowance of the expenditure restricted by the DSIR. 5.3 The assessee has relied upon the judgment of the Hon ble High Court of Gujarat in the case of Commissioner of Income-tax Vs. Claris Lifesciences Ltd. [2008] 174 Taxman 113 (Gujarat), wherein the Hon ble under identical facts has held as under: 7. The Tribunal has considered the submissions made on behalf of the assessee and took the view that section s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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