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Income Tax Appellate Tribunal, “A” BENCH, PUNE
Before: SHRI R.S.SYAL, VP & SHRI PARTHA SARATHI CHAUDHURY, JM
आदेश / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
This appeal preferred by the assessee emanates from the order of the Ld. CIT(Appeals)-6, Pune dated 13.12.2016 for the assessment year 2012-13 as per the grounds of appeal on record.
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The brief facts in this case are that the assessee company is engaged in the business of variety of sealing solutions such as cylinder head gaskets, exhaust manifold gaskets, value cover gaskets, oil pan gaskets, timing gear gaskets and various secondary gaskets. The assessee filed his return of income for the assessment year 2012-13 declaring total income of Rs.5,84,47,030/- on 29.09.2012. The Assessing Officer passed assessment order u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟) on 31.12.2014 determining income at Rs.8,06,44,940/-. The Assessing Officer made addition of Rs.2,21,97,906/- u/s.35(2AB) of the Act.
The assessee had set up R & D facility at Tal. Khed, Dist. Pune to develop technology for products and process to meet changing requirements arising from customers specific needs, environment protection and avoidance of wasteful consumption of natural resources through deduction in use of material inputs and import substitutions to have foreign exchange. The assessee made an application u/s.35(2AB) of the Act to the Department of Scientific and Industrial Research (DS & IR), Govt. of India seeking recognition of the in-house R & D facility. The assessee received a letter dated 28.11.2011 from the DS & IR informing that it has been decided to accord recognition to the in-house R & D unit of the assessee company upto 31.03.2014. In response, the assessee submitted the application in Form No.3CK along with the undertaking as per the DS & IR guidelines and copy of the annual report for the financial year 2010-11 on 02.03.2012. The assessee received a letter dated 04.06.2014 in which the recognition for the in-house R & D facility u/s.35(2AB) of the Act was denied. Subsequently, the assessee received a letter dated 05.06.2014 informing him of the renewal of the recognition of the in-house R & D unit upto 31.03.2016 and this apparently is in response to the assessee‟s application for renewal of in-house R & D
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beyond 31.03.2014. The assessee claimed a deduction of Rs.2,21,97,906/- u/s.35(2AB) of the Act in the computation of income. The Assessing Officer in this case disallowed the entire claim of the assessee since the assessee did not have approval in Form No.3CK, however, though the assessee had received recognition from the Department of Scientific and Industrial Research (DS & IR), Govt. of India.
The Ld. CIT(Appeals) upheld the findings of the Assessing Officer as per reasons recorded in his order which is on record.
At the time of hearing, the Ld. AR of the assessee vehemently argued that at the relevant point of time though approval was not provided to them, however, vide order dated 28.11.2011, Ministry of Science and Technology, Govt. of India had provided recognition to the assessee regarding in-house R & D unit. That further, the Ld. AR of the assessee submitted that with effect from 1st April, 2014 up to 31st March, 2016 for the purpose of Section 35(2AB), approval has been granted regarding in-house research and development facilities to the assessee. The Ld. AR of the assessee further placed reliance on the decision of the Hon‟ble Delhi High Court in the case of Commissioner of Income Tax-III Vs. Sandan Vikas (India) Ltd., 335 ITR 117 (Delhi) wherein it has been held that once certificate by Department of Scientific and Industrial Research (DS & IR), Govt. of India is issued that would be sufficient to hold that the assessee fulfil conditions laid down in Section 35(2AB) of the Act.
The Ld. DR could not place on record any decision contrary to the view taken by the Hon‟ble Delhi High Court nor any decision in favour of Revenue of the Hon‟ble Apex Court.
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We have perused the case records and heard the rival contentions. We find that it is on record that recognition was granted at the time when assessment was framed qualifying the R & D facility to the assessee and thereafter, even approval was also given to the assessee. Interpretation of the decision of Hon‟ble Delhi High Court in the case of Commissioner of Income Tax-III Vs. Sandan Vikas (India) Ltd. (supra.) says that once a certificate by DSIR is issued which is essentially relates to assessee‟s R & D activity, in such case the assessee is entitled to get benefit of Section 35(2AB) of the Act. In view of the matter, we set aside the order of the Ld.CIT(Appeals) and allow the grounds of appeal raised by the assessee.
In the result, appeal of the assessee is allowed.
Order pronounced on 24th day of September, 2019.
Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER ऩुणे / Pune; ददनाांक / Dated : 24th September, 2019. SB आदेश की प्रनिलऱपप अग्रेपषि / Copy of the Order forwarded to : अऩीऱाथी / The Appellant. 1. प्रत्यथी / The Respondent. 2. 3. The CIT(Appeals)-6, Pune. 4. The Pr. CIT-5, Pune. , आयकर अऩीऱीय अधधकरण, “ए” बेंच, 5. ववभागीय प्रतततनधध ऩुणे / DR, ITAT, “A” Bench, Pune. गार्ड फ़ाइऱ / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
तनजी सधचव / Private Secretary आयकर अऩीऱीय अधधकरण, ऩुणे / ITAT, Pune.
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Date 1 Draft dictated on 24.09.2019 Sr.PS/PS 2 Draft placed before author 24.09.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order