COOPER CORPORATION PVT. LTD,,SATARA vs. ASSISTANT COMMISSIONER OF INCOME-TAX, SATARA CIRCLE , , SATARA

These two appeals preferred by the assessee emanates from the different orders of the Ld. CIT(Appeals)-4, Pune dated 19.05.2017 and 28.04.2017 for the assessment years 2013-14 & 2014-15 as per the grounds of appeals on record.

The Ld. Counsel for the assessee at the very outset submitted that the facts and circumstances and the issues involved in both these appeals are identical and similar in nature. The Ld. DR also conceded to these facts.

That further, Ground No.2 in both the aforesaid appeals, the assessee is not pressing this ground. After recording the submissions, we dismiss Ground No.2 as not pressed in respect of both the appeals.

The only effective ground for adjudication in respect of both these appeals is Ground No.1 which pertains to confirmation of disallowance by the Ld. CIT(Appeals) u/s.35(2AB) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) being amount of expenditure incurred on in-house Research & Development Facility but not reported in Form 3CL issued by the Department of Scientific and Industrial Research (DSIR).

The brief facts of the case are that during assessment proceedings, the Assessing Officer found that the assessee had claimed weighted deduction @200% on Rs.4,24,58,703/- u/s.35(2AB) of the Act on account of capital and revenue expenditure incurred on in-house R & D facility in the return of income. The submissions of the assessee in detail is given at Para 5.2 of the assessment order. The assessee had not made the claim in the return of income and hence, the same was not allowed by the Assessing Officer. Accordingly, deduction u/s.35(1)(iv) of the Act was restricted @200% of the amount quantified in the approval of the DSIR and the balance amount of Rs.54,03,317/- was allowed as deduction @100% u/s.35(1)(iv) of the Act. Thus, total deduction u/s.35(2AB) and u/s.35(1)(iv) of the Act was Rs.7,95,14,089/- and the balance claim of Rs.54,03,317/- was disallowed and added to the total income of the assessee.

The Ld. CIT(Appeals) vide Para 5.3 of his order on this issue relying on his own decision in assessee‟s case for assessment year 2011-12 had decided the ground against the assessee. The detailed reasoning and the relevant findings of the Ld. CIT(Appeals) are already on record.

At the time of hearing, the Ld. Counsel for the assessee brought to the notice of the Bench that this issue has been consistently held in favour of the assessee in assessee‟s own case for assessment year 2010-11, 2011-12 and 2012-13. The assessment years before us are A.Ys. 2013-14 & 2014-15. That both the parties have agreed, the facts and circumstances and issues involved are absolutely identical in both the assessment years under consideration. The Ld. Counsel for the assessee submitted that Rule 6(7A)(b) came into effect from 01.07.2016 wherein under sub-rule(ii) of (b) of (7A) requires the assessee to quantify the expenditure incurred on in-house research and development facility. The Ld. Counsel further submitted that since the assessment years under consideration are A.Ys. 2013-14 & 2014-15, the sub-rule (ii) of (b) of (7A) of Rule 6 is not applicable.

The Pune Bench of the Tribunal in assessee‟s own case in & 1804/PUN/2017 for the assessment years 2011-12 & 2012-13 relying on assessee‟s own case for assessment year 2010-11 observed and held as follows : “5. Heard both parties and perused the material available on record. During the course of assessment proceedings, the Assessing Officer requested the assessee to give details regarding the deduction claimed u/s. 35(2AB) of the Act. The assessee vide reply dated 11-03-2014 furnished the details and copy of approval granted by the Department of Science and Industrial Research (DSIR). We find that the assessee incurred capital expenditure at Rs.1,90,62,094/- and revenue expenditure at Rs.4,97,26,668/- totalling to Rs.6,87,88,762/-. According to Assessing Officer, the DSIR has given approval up to an extent of Rs.2,79,81,000/- and assessee is entitled for deduction at the rate of 200% to an extent of Rs.5,59,62,000/- and on remaining amount Rs.1,28,26,762/- (Rs.6,87,88,762/- - Rs.5,59,62,000/-) disallowed @ 100% to an extent of Rs.64,13,344/-. The CIT(A) confirmed the same. The contention of ld. AR is that the Rule 6(7A)(b) came into effect from 01- 07-2016 wherein under sub-rule (ii) of (b) of (7A) requires the assessee to quantify the expenditure incurred on in-house research and development facility. He submits that since the assessment year under consideration is 2011-12 the (ii) of (b)(7A) of Rule 6 is not applicable. He brought to our notice on similar identical facts, this Tribunal allowed the claim in assessee’s own case for A.Y. 2010-11 wherein on perusal of the same we note that this Tribunal held that it is not the requirement of law to get any certification/approval of expenditure from the DSIR in for No. 3CL and directed the Assessing Officer to allow the weighted deduction expenditure incurred in the hands of assessee u/s. 35(2AB) of the Act. For ready reference the para No. 18 is reproduced here-in-below : “18. Applying the aforesaid ratio to the present set of facts, where it is not the requirement of law to get any certification / approval of expenditure from the DSIR in form No.3CL, there is no merit in the orders of authorities below in denying weighted deduction under section 35(2AB) of the Act. It may further be pointed out that the assessee on a later date had received the said form No.3CL from the DSIR on 08.04.2013. Accordingly, we direct the Assessing Officer to allow weighted deduction at 150% of expenditure incurred in the hands of assessee under section 35(2AB) of the Act. Hence, revised ground of appeal No.1 raised by assessee is allowed.”

In the similar facts and circumstances, the Ld. DR for these assessment years also i.e. A.Ys. 2013-14 & 2014-15, did not dispute the observation made by the Tribunal in assessee‟s own case for assessment years 2010-11, 2011-12 and 2012-13(supra.)

The Ld. Counsel for the assessee further brought to the notice of the Bench that same view has been taken by the Bangalore Bench of the Tribunal in the case of M/s. Mahindra Electric Mobility Ltd. Vs. The Assistant Commissioner of Income Tax, Circle 4(1)(2), Bangalore in dated 14th September, 2018 wherein the Tribunal has observed and held as follows:

In the result, both the appeals of the assessee in & 2661/PUN/2017 for the assessment year 2013-14 & 2014-15 are partly allowed.

The CIT(Appeals)-4, Pune.

The Pr. CIT-3, Pune. , आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ववभागीय प्रतततनधध ऩुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // तनजी सधचव / Private Secretary आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune.