BOTIL OIL TOOLS INDIA PVT.LTD., NEW DELHI vs. ACIT, CIRCLE-5(1), NEW DELHI

These two appeals are filed by the assessee against two separate orders, both dated 30.09.2019 of the Ld. Commissioner of Income Tax (Appeals)-2 [(hereinafter referred to CIT (Appeals)] New Delhi, for assessment years 2015-16 and 2016-17.

The assessee has raised the following substantive ground of appeal :-

The assessee has raised the following substantive grounds of appeal :-

Brief facts of the case are that, the assessee Company filed return declaring income of Rs. 26,92,98,410/-, the case of the assessee was selected or scrutiny through CASS and an assessment order came to be passed u/s 143 (3) of the Act on 11/08/2017 by determining the total income of the assessee at Rs.30,77,89,980/- by disallowing the claim made u/s 35(2AB) of the Act.

As against the assessment order, the assessee has preferred an appeal before the CIT(A) and contended that the assessee company is recognized by DSIR as genuine R & D facility centre for the purpose of Section 35(2AB) of the Income Tax Act. The assessee company has claimed deduction on the said bonafide belief. However, the A.O. disallowed the claim made u/s 35(2AB) amounting to Rs. 3,84,91,572/- of the Act merely on some technical irregularities. The CIT(A) vide order dated 30/09/2019 dismissed the appeal filed by the assessee.

As against the order of the CIT(A) dated 30/09/2019, the assessee has preferred the present appeal on the grounds mentioned above.

The Ld. counsel for the assessee vehemently submitted that the CIT(A) has erred in law and on fact in confirming the disallowance of claiming u/s 35(2AB) which is related to R & D expenditure incurred by the assessee recognized R & D and duly approved by DSIR. The R & D expenditure of the assessee is certified by the statutory auditor. Therefore submitted that the order of the Lower Authorities are arbitrary and the disallowance is deserves to be deleted.

On the other hand, the Ld. DR submitted that before the CIT(A), sufficient opportunity has been provided to the assessee for filing Form 3CM from DSIR. Even after providing sufficient opportunities, the assessee has not filed Form 3CM from DSIR before the CIT(A). Therefore, now the assessee cannot find fault with the CIT(A), thus, prayed for dismissal the appeal.

We have heard the parties perused the material available on record and gave our thoughtful consideration.

During the appellate proceedings while dismissing the appeal the CIT(A) has held as under:-

It is found that the assessee has claimed the expenditure during the year on its own research and development centre which is duly approved by DSIR.

By considering the above facts and circumstances, we deem it fit to restore the issue involved in the Appeal to the file of CIT(A) with a direction to the assessee to file Form 3CM issued by DSIR within the reasonable time and once the assessee produces the requisite documents of granting necessary approval to the assessee, the CIT(A) shall decide the matter afresh in respect of entitlement of the assessee for claiming deduction u/s 35(2AB) of the Act in accordance with law.

Ergo, the appeal of the assessee is partly allowed for statistical purpose.

The CIT(A) while deciding the issue invoked in the Assessment Year 2016-17, relied on the order of A.Y 2015-16 in Assessee’s own case since the facts and circumstances of the case are similar to that of Assessment Year 2016-17, the issue involved in the present appeal is also restored to the file of the CIT(A) with a direction to the assessee to file Form 3CM issued by DSIR within the reasonable time and once the assessee produces the requisite documents of granting necessary approval to the assessee, the CIT(A) shall decide the matter afresh in accordance with law.

Ergo, the appeal of the assessee is partly allowed for statistical purpose.