9911796707
TMI Blog2025 (3) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... 2,30,00,000/- under section 68 of the Act. Disallowance of Rs. 33,74,518/- under section 35(2AB) of the Act 2. The NFAC failed to appreciate that deduction under section 35(2AB) could not be denied for expenditure incurred prior to 25.10.2019 merely because the approval u/s 35(2AB) was granted w.e.f 25.10.2019. Hence, the disallowance of Rs. 33,74,518/- is bad in law. 3. The NFAC failed to appreciate that the amount of Rs. 5,70,811/- did not pertain to cost of land or building, and hence, the same could not be disallowed on the ground that the same was in the nature of capital expenditure. 4. Without prejudice to the above, the NFAC failed to appreciate that the disallowance of Rs. 5,70,811/- was already included in the disallowance of Rs. 28,03,707/- and hence the same could not be disallowed again leading to double taxation." 3. The issue arising in ground no.2, raised in assessee's appeal, pertains to the addition on account of the unsecured loan under section 68 of the Act. 4. The brief facts of the case pertaining to this issue, as emanating from the record, are: The assessee is engaged in the business of developing high- quality medication through in-house research ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... undeniable fact that the loan was taken under a running account. From the perusal of the written submission dated 14/12/2021 filed before the AO, forming part of the paper book on pages 8-10, we find that the assessee submitted the aforesaid details along with providing the PAN and address of the loan lender, i.e. Mr. Karius Dadachanji. The ledger of the unsecured loans for the year under consideration was also furnished to the AO along with the aforementioned written submission. In the paper book filed before us, the assessee has also placed on record the bank statement of the assessee to show the receipt of the unsecured loan of Rs. 2,30,00,000 during the year under consideration. From the perusal of the aforesaid bank statement, which forms part of the record from pages 11-20, we find that an amount of Rs. 75 lakh was received by the assessee on 09/05/2019, another amount of Rs. 75 lakh was received by the assessee and 05/08/2019 and an amount of Rs. 80 lakh was received by the assessee on 11/10/2019 from Mr. Karius Dadachanji. We further find that the company repaid an amount of Rs. 3,55,00,000 on 20/01/2020 to Mr. Karius Dadachanji. From the return of income of Mr. Karius Dad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 35(2AB) of the Act on 23/10/2020 for the period 25/10/2019 to 31/03/2020. However, from the submission of the assessee, it was found that the assessee has claimed the capital and revenue expenditure incurred prior to the approval, i.e. 25/10/2019 as the well and on the said expenditure qualifying deduction @150% has also been claimed not only on the capital expenditure but also on the revenue expenditure. Thus, it was found that out of the revenue expenditure of Rs. 2,16,49,662 claimed by the assessee Rs. 56,07,415 claimed to be incurred pertains to the period prior to 25/10/2019 whereupon deduction @150% worked out at Rs. 84,11,122 has been claimed which should be claimed only of Rs. 56,07,415. Therefore, the AO concluded that the extra claim of revenue expenditure of Rs. 28,03,707 (Rs.84,11,122 - Rs. 56,07,415) is liable to be disallowed as being an excess claim undersection 35(2AB) of the Act. Further, the excess capital expenditure claimed under section 35(2AB) of the Act of Rs. 5,70,811 was also held not liable to be allowed under the business head being in the nature of capital expenditure incurred prior to sanction under section 35(2AB) of the Act. Thus, a sum of Rs. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y DSIR are considered from 1st April of the year in which the application is made in Form 3CK. In the present case, as noted above the said application in Form 3CK was made by the assessee to the DSIR on 26/12/2019. 13. We find that in Maruti Suzuki India Ltd v/s Union of India, reported in (2017) 397 ITR 728 (Del.), the Hon'ble Delhi High Court held that for availing the benefit under section 35(2AB) of the Act what is relevant is not the date of recognition or the cut-off date mentioned in the certificate or the DSIR or even the date of approval but the existence of the recognition. It was further held that if a R&D Centre is not recognised it is not entitled to a deduction but if it is recognised, it is entitled to the benefit. 14. Similarly, the Hon'ble Gujarat High Court in CIT v/s Claris Lifesciences Ltd, reported in [2010] 326 ITR 251 (Guj.) held that since the approval is granted during the previous year relevant to the assessment year in question, the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under section 35(2AB) of the Act by the assessee. The relevant findings of the Hon'ble Gujarat High Court, in the aforementioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year in question, we are of the view that the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under section 35(2AB) of the Act by the assessee." 15. Therefore, respectfully following the aforesaid decisions and having considered the guidelines issued by the DSIR, since in the present case the R&D facility of the assessee has already been approved by the DSIR, we are of the considered view that the assessee is entitled to claim deduction under section 35(2AB) of the Act even in respect of the expenditure incurred prior to 25/10/2019, i.e. from 01/04/2019, for the year under consideration. 16. During the hearing, the learned AR by referring to pages 4-5 of the assessment order submitted that an amount of Rs. 5,70,811 has been disallowed twice as the said amount is included in Rs. 28,03,707 disallowed as an excess claim of revenue expenditure. Therefore, we deem it appropriate to restore this issue to the file of the Jurisdictional AO with a direction to allow the claim of deduction under section 35(2AB) of the Act, as per law, in respect of the expenditure incurred from 01/04/2019 after necessary verification of the details of such ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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