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Facts
The Revenue appealed an order allowing weighted deduction u/s 35(2AB) for AY 2019-20, as the expenditure was not initially certified by DSIR in Form 3CL. The assessee claimed R&D expenditure, but Form 3CL was not available at assessment. The CIT(A) allowed the claim based on subsequent submission of Form 3CLA and other documents.
Held
The Tribunal restored the matter to the Assessing Officer to allow the weighted deduction as per the subsequently issued Form 3CL from DSIR. Regarding TDS credit, the Tribunal directed the AO to grant full credit as claimed and supported by Form 26AS, as the corresponding income was already offered to tax.
Key Issues
Whether weighted deduction u/s 35(2AB) can be allowed if Form 3CL is submitted after the assessment proceedings and whether the assessee is entitled to full TDS credit for AY 2019-20 based on subsequent carry forward and Form 26AS.
Sections Cited
35(2AB), 143(3), 154, 199
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘D’ BENCH
Before: SHRI AMIT SHUKLA & SHRI GIRISH AGRAWAL
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the Revenue against order dated 13/08/2024 passed by NFAC, Delhi for the quantum of assessment passed u/s.143(3) for the A.Y.2019-20. 2. In the grounds of appeal, the Revenue has challenged allowing the weighted deduction u/s. 35(2AB) on the basis of expenditure not certified by DSIR in Form No.3CL.
1. Mazagaon Dock Shipbuilders Limited 3. The brief facts are that assessee company claimed to have incurred R & D revenue expenditure of Rs.74,08,52,811/- and assessee has claimed deduction of Rs.37,04,26,406/- in the R & D revenue expenses. At the time of assessment proceedings Form 3CL was not available for claiming the deduction u/s.35(2AB) and accordingly, ld. Assessing Officer has made addition of Rs.37,04,26,406/-.
The ld. CIT(A) noted that assessee had submitted Form 3CM showing application of company’s in-house R & D facility and the said documents provided detailed information about the R & D activities and expenditure necessary for claiming deduction u/s.35(2AB). He also noted that Form 3CL has not been received by the assessee till date and assessee has also submitted Form No.3CLA showing the details of expenditure. After relying upon certain judgments, he allowed assessee’s claim.
Before us it has been submitted that now Form 3CL has been issued by the DSIR wherein following R & D expenditure has been held to be eligible for deduction u/s 35(2AB). (in lakhs) Assessment Year 2019-20 A Capital expenditure (other than land & building) Nil B Recurring expenditure 5495.78 C R&D expenditure eligible for deduction u/s 35(2AB) 5495.78
Accordingly, this matter is restored back to the file of the Jurisdictional Assessing Officer that now Form 3CL has been issued, the weighted deduction has to be allowed as certified and quantified by the DSIR in Form 3CL.
Another issue which has been raised by the Revenue is that the ld. CIT(A) has given the TDS credit which ld. Assessing Officer has restricted at Rs.90,90,12,626/- as against Rs.91,97,31,885/- as stated by the assessee. Thus, there is short grant of credit for TDS of Rs.107,19,259/-. It was further submitted that in the proceedings u/s.154, TDS credit of only Rs.28,04,66,042/- was given.
Before the ld. CIT(A) assessee has given following submissions:- “The Assessing officer while computing the tax liability has granted TDS credit of Rs. 90,90,12,626/- only thereby granting short TDS credit of Rs. 107,19,259/~. We would like to inform you that the full amount of TDS credit as claimed by the appellants is fully shown in the Form 26AS. The TDS credit is being short granted for the following entity: Name TAN FY TDS Amount Principal Controller DELP1135 2015- 1,07,19,259/- of Defence Accounts 3G 16 In AY 2016-17 the TDS credit of Rs. 1 ,09,65,0807- showing corresponding income of Rs. 54,82,54,000/- is reflected in Form 26AS (copy of Form 26AS of AY 2016-17 is attached herewith). The entire TDS credit was being carried forward to subsequent years. The said TDS credit of Rs.1,09,65,080/- of A.Y.2016-17 is being claimed as under in the subsequent years:
AY in which Amount of TDS Corresponding Remarks if TDS credit of AY credit claimed Income offered to any 2016-17 is being tax claimed AY 2017-18 Rs. 2,45,821 Rs. 1,22,91,050 Balance carried forward to next year AY 2018-19 No TDS credit of AY 2016-17 is claimed in this year AY 2019-20 Rs. Rs. 1,07,19,259/- 53,59,62,950/- TOTAL Rs. Rs. 54,82,54,000 1,09,65,080/- As can be seen from the above table, the appellants have carried forward the TDS credit of Rs. 1,07,19,259/- of AY 2016-17 and the said TDS credit is being claimed in AY 2019-20. As stated above, in AY 2019-20, the appellants has offered the Income to tax under the head 'Business and Profession' and therefore TDS credit on the same was claimed in the ITR. Hence following the provision of section 199, the TDS credit claimed by your appellant should be granted. The appellants, therefore, request your honours to kindly direct the Assessing officer to grant full credit of TDS of Rs. 91,97,31,885/- as claimed by your appellant."
The ld. CIT(A) has directed the ld. AO to grant full credit of TDS after observing as under:-
Mazagaon Dock Shipbuilders Limited “The appellant has explained that TDS on transaction of payment to principal controller of defence accounts as mentioned above could not be claimed fully in the year 2016-17 and onwards The claim of complete TDS and corresponding Income has been clarified in the above table. Since the corresponding income has already been offered to tax. The claim of TDS in subsequent years due to peculiar nature of business and non-claim of TDS in the relevant year cannot be denied to appellant. The claim of the appellant is fully supported by Form no. 26AS submitted. The AO is directed to grant full credit of TDS of Rs. 91,97,31,885/-“.
The only argument made by the ld. DR is that ld. AO should verify aforesaid contention of the assessee raised before the ld. CIT(A). It seems that ld. AO has not taken note of the aforesaid facts and accordingly, ld. AO is directed to verify the same and grant full credit of TDS if the assessee has claimed that full amount of TDS credit which has been fully shown in the Form 26AS as per the chart reproduced hereinabove. Although, we do not find any infirmity in the order of the ld. CIT(A) however, ld. AO should verify the same and grant credit.
In the result, appeal of the Revenue is partly allowed for statistical purposes.
Order pronounced on 29th January,2025.