ACIT 13(3)(1), MUMBAI vs. REX TONE INDUSTRTIES LTD, MUMBAI

The fact in brief is that assessee has filed return of income declaring total income at Rs.74,58,440/-. The assessment u/s 143(3) of the Act was completed on 13.03.2015. The A.O had disallowed the claim of deduction u/s 35(2AB) of the Act on the ground that it had obtained certificate from the Ministry of Science and Technology as approval u/s 35(2AB) of the Act on 03.04.2012 which showed that assessee was not entitled for claiming deduction for assessment year 2012-13 since the approval was obtained during the assessment year 2013-14.

Aggrieved, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) has allowed the claim of deduction u/s 35(2AB) of the Act holding that an application dated 12.03.2011 for recognition was made earlier on 08.11.2011 but approval was received on 03.04.2012 after placing reliance on the decision of Hon’ble High Court of Gujarat in the case of Clans Life Sciences Ltd.

Heard both the sides and perused the material on record. During the course of assessment the assessee was asked to file the copy of approval given by the department of Scientific & Industrial Research u/s 35(2AB) of the Act. The A.O noticed that approval was granted on 03.04.2012 in the F.Y. 2012-13, therefore, he has disallowed the claim of deduction pertaining to the year under consideration stating that assessee was not entitled to claim deduction u/s 35(2ab) of the Act. It is noticed that assessee has made application for approval to the Scientific department of the Government of India on 08.11.2011 and approval was granted on 03.04.2012. In this regard the ld. CIT(A) has referred the decision of Hon’ble Gujarat High Court in the case of CIT Vs. Clans Life Science Ltd. (2009) 221 CTR (Guj) wherein it is held that the cut of date

3 ACIT-13(3)(1) Vs. M/s Rex-tone Industries Ltd. mentioned in the certificate issued by the DSIR would be of no relevance. It is also held that what is to be seen is that the assessee was indulged on R & D activity and had incurred expenditure thereupon and once a certificate by DSIR is issued that would be sufficient to hold that the assessee fulfill the conditions laid down in the aforesaid provisions. After taking into consideration the fact and findings of ld. CIT(A) as supra, we don’t find any infirmity in the decision of ld. CIT(A) in allowing the claim of deduction u/s 35(2AB). Therefore, all the ground of appeal of the revenue stand dismissed.