ACIT-7(1)(1), MUMBAI, MUMBAI, MAHARASHTRA vs. GREAVES COTTON LIMITED, MUMBAI

This appeal by the revenue is preferred against the order dated 15/10/2024 by NFAC, Delhi pertaining to AY 2011-12.

The grievance of the revenue read as under:- “I. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing deduction u/s 35(2AB) of the Act claimed over and above the expenditure as certified by the Department of Scientific & Industrial Research ("DSIR") in Form 3CL to be incurred on scientific research related to the business of assessee ignoring the fact that DSIR is the only authority to examine and certify whether the expenditure claimed are incurred on scientific research or not?" II. "Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) was justified in allowing deduction u/s 35(2AB) of the Act claimed over and above as certified by DSIR in Form 3CL without verifying the fact whether such expenditure has incurred only on scientific research by fulfilling the conditions as laid down in provisions of section 35(2AB) of the Act or not and without remanding the matter back to the file of AO for examination of correctness of claim made as per provision of section 35(2AB) of the Act?”

The quarrel revolves around the disallowance of deduction u/s 35(2AB) of the Act amounting to Rs. 15,61,01,680/-. This issue was considered by the Co-ordinate Bench in ITA No. 2069/Mum/2017, and ITA No. 6560/Mum/2018. The relevant findings of the Co-ordinate Bench reads as under:- “029. We have carefully considered the rival contention and perused the orders of the lower authorities. There is no denial that assessee is recognized research and development unit. It is not in dispute that assessee has incurred expenditure for research and development. The assessee has submitted the respective details before the DSIR. On the basis of the assessment, it has reduced the amount of expenditure incurred by the assessee. The coordinate bench ACIT V Crompton Greaves Ltd. [2019] 111 taxmann.com 338 (Mumbai - Trib.)has held that Mandate of approval of quantum of expenditure had been put in place only with effect from 1-7-2016, hence, non-approval of quantum of expenditure for assessment year 2009-10 did not entitle Assessing Officer to make disallowance under section 35(2AB). The assessment year involved before us is assessment year 2011 – 12. Therefore respectfully following the decision of the coordinate bench, we direct the learned assessing officer to delete the disallowance of deduction under section 35 (2AB) of the act of ₹ 23,096,418/–. Ground number D of the appeal is allowed.”