9911796707
TMI Blog2025 (3) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... prior to 25/10/2019, i.e. from 01/04/2019, for the year under consideration.
Amount disallowed twice - 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 expenditure. X X X X Extracts X X X X X X X X Extracts X X X X ..... tement of Mr. Karius Dadachanji, from whom unsecured loan of Rs. 2,30,00,000 was taken during the year under consideration, the Assessing Officer ("AO") vide order dated 02/09/2022 passed under section 143(3) read with section 144B of the Act concluded that all the limbs, viz. identity, creditworthiness and genuineness of the transaction of the said party has not been established. Thus, the AO held that the assessee has failed to explain the nature and source of credit of Rs. 2,30,00,000 reflected in its books of account and accordingly added the same to the total income of the assessee under section 68 of the Act. 5. The learned CIT(A), vide impugned order, dismissed the ground raised by the assessee on this issue and upheld the addition made by the AO under section 68 of the Act. Being aggrieved, the assessee is in appeal before us. 6. We have considered the submissions of both sides and perused the material available on record. In the present case, there is no dispute regarding the fact that during the year under consideration, the assessee received an unsecured loan of Rs. 2,30,00,000 from Mr. Karius Dadachanji. It is further undisputed that as on 01/04/2019 opening balance o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, as the loan was taken not from any stranger but a 50% shareholder for the routine course of business to meet business-related expenditure under a running account. Therefore, we find that the assessee has explained the nature and source of the sum credited to its account as an unsecured loan during the year under consideration. Accordingly, we find no basis in the addition made under section 68 of the Act and the same is deleted. As a result, ground no.2 raised in assessee's appeal is allowed. 8. The issue arising in ground no.3, raised in assessee's appeal, pertains to restricting the deduction claimed under section 35(2AB) of the Act for the period mentioned in Form 3CM. 9. The brief facts of the case pertaining to this issue, as emanating from the record, are: During the assessment proceedings while perusing the income tax return filed by the assessee, it was observed that the assessee claimed expenditure of Rs. 2,16,49,662 under section 35(2AB) of the Act and as a qualified expenditure it has claimed the deduction of Rs. 3,24,74,493 under the said head which is 150% of the actual expenditure incurred of Rs. 2,16,49,662 undersection 35(2AB) of the Act. During the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the record that in order to seek the approval from the DSIR, the assessee filed application in Form 3CK on 26/12/2019, which forms part of the paper book from pages 319-323. Vide Form 3CM dated 23/10/2020, the DSIR granted approval to the assessee for the purpose of section 35(2AB) of the Act from 25/10/2019 to 31/03/2020 in respect of the R&D facility of the assessee at Daman and Diu. Since the approval was granted in Form 3CM from 25/10/2019, the AO restricted the deduction claimed under section 35(2AB) of the Act only in respect of the revenue and capital expenditure incurred after 25/10/2019 and disallowed the weighted deduction in respect of revenue expenditure incurred prior to 25/10/2019 and capital expenditure incurred prior to 25/10/2019. Accordingly, the AO made a disallowance of 33,74,518 under section 35(2AB) of the Act. 12. In support of its submission that even though the approval is granted subsequently but the same is applicable from the 1st April of the year in which the application is made, the learned AR placed reliance upon the Guidelines for Approval in Form 3CM of In-House R&D Centres issued by the DSIR, which forms part of the paper book from pages 67-101 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all expenditure so incurred. The Tribunal has, therefore, come to the conclusion that on plain reading of section itself, the assessee is entitled to weighted deduction on expenditure so incurred by the assessee for development of facility. The Tribunal has also considered rule 6(5A) and Form No. 3CM and come to the conclusion that a plain and harmonious reading of rule and Form clearly suggests that once facility is approved, the entire expenditure so incurred on development of "R & D" facility has to be allowed for weighted deduction as provided by section 35(2AB). The Tribunal has also considered the legislative intention behind above enactment and observed that to boost up R & D facility in India, the Legislature has provided this provision to encourage the development of the facility by providing deduction of weighted expenditure. Since what is stated to be promoted was development of facility, intention of the Legislature by making above amendment is very clear that the entire expenditure incurred by the assessee on development of facility, if approved, has to be allowed for the purpose of weighted deduction. 8. We are in full agreement with the reasoning given by the Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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