FORBES MARSHALL PVT. LTD.,PUNE vs. INCOME TAX OFFICER CIRCLE 8, PUNE

ITA 3206/PUN/2025Status: DisposedITAT Pune28 September 2026AY 2017-186 pages
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What were the facts?

The assessee, Forbes Marshall Pvt. Ltd., filed an appeal before the Income Tax Appellate Tribunal (ITAT) Pune against the order of the National Faceless Appeal Centre (NFAC), Delhi, which stemmed from an assessment order passed under Section 143(3) of the Income Tax Act, 1961, for Assessment Year 2017-18. The dispute concerns deductions claimed under Section 35(2AB) and Section 35(1)(iv) of the Act. The Assessing Officer (AO) disallowed the entire deduction of Rs. 14,17,96,439/- claimed under Section 35(2AB) for want of a certificate from the Department of Scientific and Industrial Research (DSIR). The CIT(A) granted partial relief, allowing deduction for recurring expenditure of Rs. 11,97,81,000/- but denied deduction for capital expenditure of Rs. 6,30,915/- under Section 35(1)(iv) on the ground that the issue was not examined during assessment.

What did the Tribunal hold?

The Tribunal held that the assessee is eligible for weighted capital allowance of Rs. 12,61,831/- (Rs. 6,30,915 x 200%) under Section 35(2AB). The Tribunal noted that the DSIR certificate dated 29.02.2020, covering Assessment Years 2017-18 and 2018-19, approved total eligible business development expenditure of Rs. 1204.12 lakhs, which included capital expenditure of Rs. 6.31 lakhs. The CIT(A) had only considered the recurring expenditure and failed to account for the capital expenditure which was also part of the DSIR approval. Therefore, Ground No. 1 was allowed. Regarding Ground No. 2, concerning deduction under Section 35(1)(iv), the Tribunal observed that the CIT(A) denied it because the issue was not taken up during assessment. However, the Tribunal noted that Section 35(1)(iv) does not require DSIR certification. The assessee's counsel fairly accepted that the claim under Section 35(1)(iv) was included within the claim under Section 35(2AB). The Tribunal directed the jurisdictional AO to examine the issue, verify if the claim appears in the books of account, and ensure it has not been claimed under Section 35(2AB). If found correct, the deduction under Section 35(1)(iv) shall be granted after providing a reasonable opportunity of hearing. Ground No. 2 was allowed for statistical purposes. The appeal of the assessee was allowed for statistical purposes.

What were the issues?

1. Whether the assessee is eligible for weighted capital allowance of Rs. 12,61,831/- under Section 35(2AB) of the Income Tax Act, 1961, on capital expenditure of Rs. 6,30,915/-, which was certified by the DSIR. 2. Whether the assessee is eligible for deduction of Rs. 6,19,181/- under Section 35(1)(iv) of the Income Tax Act, 1961, for capital expenditure incurred on scientific research related to the business, irrespective of DSIR certification. Assessee's Contentions: - The CIT(A) erred in not allowing eligible capital expenditure of Rs. 6,30,915/- under Section 35(2AB), as it was certified by DSIR and expressly eligible under the provision. - The CIT(A) erred in denying deduction under Section 35(1)(iv) for Rs. 6,19,181/-, as this expenditure does not require DSIR certification, is capital in nature, incurred for scientific research related to business, and is independently allowable. Revenue's Contentions: - The learned DR supported the order of the learned CIT(A).

Which sections of the Income-tax Act were involved?

Section 35(2AB),Section 35(1)(iv),Section 143(3),Section 35(1)(vi),Section 35(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCHES “A”, PUNE

Before: DR.MANISH BORAD & SHRI PAVAN KUMAR GADALE

For Appellant: Shri Kishor B. Phadke, CA
For Respondent: Shri Rajesh Haladkar
Hearing: 05.08.2026Pronounced: 28.09.2026

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

The captioned appeal at the instance of assessee pertaining to A.Y.2017-18 is directed against the order dated 07.10.2025 of ld. National Faceless Appeal Centre, Delhi emanating out of Assessment Order dated 28.12.2019 passed u/s.143(3) of the of the Income Tax Act, 1961. 2. Assessee has raised following grounds of appeal : “(All grounds of appeals are independent and without prejudice to each other)

1.

The learned CIT(A) has erred in law and on fact in not allowing eligible capital expenditure of Rs. 6,30,915/-, which was certified (and allowed) by the Department of Scientif

The order continues below.

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