DEPUTY COMMISSIONER OF INCOME TAX , CHENNAI vs. ASHOK LEYLAND LIMITED, CHENNAI

आयकर अपीलीय अिधकरण, ’सी’
यायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
‘C’ BENCH: CHENNAI

ी एबी टी. वक
, ाियक सद एवं
एवं
एवं
एवं

ी जगदीश, लेखा सद के सम

BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER

आयकरअपीलसं./ITA No.2600/Chny/2024
िनधारणवष/Assessment Year: 2014-15

The DCIT,
NCC-8(1),
Chennai.

v.
M/s. Ashok Leyland Ltd.,
No.1, Sardar Patel Road,
Guindy, Chennai-600 032. [PAN: AAACA 4651 L]
(अपीलाथ/Appellant)

(यथ/Respondent)

Department by :
Mr.R. Clement Ramesh
Kumar, CIT
Assessee by :
Mr.R. Vijayaraghavan,
Advocate
सुनवाईक तारीख/Date of Hearing
:
20.03.2025
घोषणाक तारीख /Date of Pronouncement
:
02.05.2025

आदेश / O R D E R
PER ABY T. VARKEY, JM:

This is an appeal preferred by the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 19.07.2024 for the Assessment
Year (hereinafter referred to as ‘AY‘) 2014-15. 2. The Revenue has raised the following grounds in this appeal:
1. The order of the learned Commissioner of Income Tax (Appeals) in ITA
ITBA/API/S/250/2024-25/1066852823(1) dated
19/07/2024
for the Assessment year 2014- case.
2. The Ld. CIT(A) erred
35(2AB) of Rs.43.97 cr
21.98 crores without a 3CL Issued by DSIR ce without appreciating th
3CL subsequently obtai be of Rs. 14.46 crores out to only Rs 28.93 cro
3. The Ld. CIT(A) erre giving an opportunity expenditure of Rs. 7.52
Rs. 21.98 crores (-) R&
been incurred for eligibl
4. For these and other g is prayed that the order
Assessing officer be rest
3. At the outset, it is appeal and the Revenue
After going through the reasonable cause for c condoned and we proce
4. The sole grievanc action of the Ld. CIT expenditure incurred at Act, which had been dis
Act, 1961 (hereinafter r
5. The brief facts as the Return of Income ( loss at Rs.(-) 762,77,5
ITA No.2600/Chny/
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-15 is erroneous in law, facts and circumstance d in allowing the entire claim for deduction@ 20
rores in respect of the R&D expenditure claime ppreciating that the assessee had not submitt ertifying the said R& D expenditure was incur at the quantum of deduction u/s 35(2AB) as p ned shows the eligible amount on R&D expend and therefore the eligible deduction u/s 35(2AB ores.
ed in allowing the said deduction u/s 35(2AB) to the AO to verify as to whether the 2 crores (R&D expenditure claimed by the ass
D expenditure certified by DSIR of Rs.14.46 cro e R&D only.
grounds that may be adduced at the time of he r of the learned CIT(A) may be set aside and th tored.
s noted that there is a delay of ‘22’
e has filed an application for condon contents of the application, we find condoning the delay and therefore ed to decide the appeal on merits.
ce of the Revenue in this appeal
T(A) allowing normal deduction f t the approved R&D Facility u/s 3
sallowed by the AO u/s.35(2AB) of t referred to as ‘the Act‘).
s noted are that, the assessee com
(RoI) for the AY 2014-15 on 28.11. 5,971/-. Subsequently, the case w

/2024 (AY 2014-15) s. Ashok Leyland Ltd.
es of the 00% u/s ed of Rs.
ed Form rred and per Form diture to B) works without balance essee of ores) has earing, it at of the days in filing of nation of delay.
d that there is a e, the same is is against the for the capital
5(1)(iv) of the the Income Tax mpany had filed
.2012 declaring was selected for scrutiny under CASS an to the assessee, the inc vide order u/s.143(3) assessment, the assess issued by DSIR and component of the de otherwise allowed norm respect of both the re approved R&D facility.
by issue of notice u/s 1
u/s.143(3) r.w.s. 147 o total loss at Rs additions/disallowances of the normal deduction of capital expenditure in 6. Aggrieved, the as who partly allowed the disallowance which is im of the Ld.CIT(A), the Re
7. Heard both the assessee had claimed
ITA No.2600/Chny/
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nd notice u/s.143(2) dated 10.09.20
come was assessed income at Rs.4
of the Act dated 30.12.2016. I see was not able to furnish the cop therefore the AO had disallowed eduction claimed u/s 35(2AB) of mal deduction u/s 35(1)(i)/35(1)(iv evenue and capital expenditure in Later on, the case of the assessee
148 of the Act and the assessment of the Act vide order dated 09.12.2
s.(-)
301,90,10,983/- in w were made, which inter alia include n of Rs.21,98,62,276/- originally allo ncurred at approved scientific R&D fa ssessee preferred an appeal before appeal of the assessee and inter a mpugned before us. Being aggrieve evenue is now in appeal before us.
parties. It was brought to our n weighted deduction u/s 35(2AB)

/2024 (AY 2014-15) s. Ashok Leyland Ltd.
015 was issued
06,76,80,822/-
In the original py of Form 3CL the weighted the Act, but v) of the Act in ncurred at the e was reopened was completed
2019 assessing which several ed disallowance owed in respect acility.
the Ld. CIT(A), alia deleted the d by the action otice that, the of the Act in relation to the expendit worked out to Rs.446.9
both the revenue & cap crores respectively. Tho in absence of Form 3C allowable; but he allow the revenue & capital ex of Section 35(1) of the allowing normal deduct incurred for scientific r the impugned reasses reassessment order. W pointed out that, it h accordingly filed rectific the weighted 35(2AB) o
Ld. CIT(A), the AO is rectification application deduction u/s 35(2AB)
Form 3CL i.e. Rs.424.2
thereof are noted to be ITA No.2600/Chny/
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ture incurred at their approved R&D
8 crores [200% of Rs.223.49 crores pital expenditure of Rs.201.51 crore ough the AO in the original assessm
CL, the weighted deduction u/s 35
ed normal deduction i.e. 100% in r xpenditure incurred for scientific res
Act. This action of the AO’s predec tion for the capital expenditure of R esearch was subsequently disputed sment, which was disallowed in We find that, before the Ld. CIT(A) had later on received the Form cation application u/s 154 of the A of the Act. Subsequent to the order also found to have acceded to , and he is noted to have allowed of the Act to the extent of the amo
6 crores (200% of Rs.212.13 crore as follows: -

/2024 (AY 2014-15) s. Ashok Leyland Ltd.
D facility which s] i.e., 200% of es and Rs.21.98
ment held that,
5(2AB) was not relation to both search in terms cessor inter alia
Rs.21.98 crores d by the AO in the impugned
), the assessee
3CL and had Act for allowing r passed by the the assessee’s d the weighted ount certified in es). The details

Particulars
Amount in scientific rese
R&D Facility c deduction u/s Revenue
Capital

(Amou ncurred towards earch at approved claimed as weighted
35(2AB)
Amount certified by DSIR in Form
3CL
Re no we de
201.51
198.32
21.98
14.81
223.49
212.13
re infirmities in the manner of cal as much as, the AO is apparently uction u/s 35(2AB) of the Act v er weighted component of deduction llowed in original assessment, the A ion of 200%. Be that as it may, th no dispute in principle between the bility of weighted deduction u/s 35( extent of Rs.212.13 crores [revenu s.14.81 crores] as allowed by t
154 of the Act which inter alia the capital expenditure to the exte ned as Rs.14.46 crores in the grou ee towards scientific research at its the DSIR in their Form 3CL. Accordi ng the disallowance of capital expen to the extent of Rs.14.81 crores, in /2024 (AY 2014-15) s. Ashok Leyland Ltd.
unt Rs. in crores) emaining amount ot eligible for eighted eduction
3.19
7.57
lculation in the found to have viz., instead of of 100%, over
AO has allowed he fact however e parties before
2AB) in respect ue – Rs.198.32
he AO in the a includes the ent of Rs.14.81
unds of appeal) approved R&D ingly the action nditure incurred n light of Form

3CL as well as subsequ call for any interference
9. In view of the ab the Ld. CIT(A)’s action capital expenditure of R
35(1)(iv) of the Act, w
35(2AB) of the Act by squarely covered in the their own case for AY
14.02.2025 wherein expenditure incurred approved R&D facility
35(2AB) is otherwise a Act. The relevant finding
“4.6 We now co deduction of the 35(1)(iv) of the A this alternate clai assessee in relati case, it is noted expenditure of a business of the a provision of Secti
(ia) of Section expenditure has capital expenditu business. Hence, entitled for norm incurred at its R
ITA No.2600/Chny/
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ent rectification order passed by th e.
bove, the limited dispute now befor of allowing the normal deduction f
Rs.7.57 crores [21.98 crores – 14
which was not allowed for weighted y the DSIR. We find this particul favour of the assessee by the decis
2018-19 in ITA No.554 & 561/Ch it was held that, the deductio by the assessee for scientific re
, if not approved for weighted llowable as normal deduction u/s 3
gs are noted to be as under:- me to the alternate claim raised by the e capital R&D expenditure of Rs.100,21,
Act. It is noted that, the lower authorities m on the ground that, no evidence was pro on thereto. Before adverting to the facts o that Section 35(1)(iv) of the Act, provid a capital nature on scientific research, re assessee shall be admissible as deduction ion 35(2) of the Act. It is further noted tha
35(2) of the Act provides that, where been incurred after 31.03.1967, the en ure is eligible for deduction from the p
, in our considered view therefore, an mal deduction i.e. 100% of the capital
R&D facility in terms of Section 35(1)(iv

/2024 (AY 2014-15) s. Ashok Leyland Ltd.
e AO, does not re us is against for the balance
.81 crores] u/s d deduction u/s ar issue to be sion rendered in hny/2023 dated on for capital esearch at its deduction u/s 35(1)(iv) of the assessee for 22,016/- u/s have denied ovided by the of the present des that any elated to the n in terms of at sub-clause e the capital tire value of profits of the assessee is expenditure v) read with Section 35(2)(ia expenditure is eli not.
4.7 Our view find
Madras High Cou
Taxman 209). In u/s 35(2AB) of th capital, incurred fulfill the conditio for weighted ded claimed normal d of the revenue a tribunal is noted rate u/s 35(1) of that the Hon'ble H as under:
"2. The pr
Section 260
purported s passed by t which the Commission expenditure not entitled
35(2AB) of approved by entitled to n under Sectio
3. The lea discussed t hereunder:
.....
3.2 After c officer has as there wa date of com claim, I find the claim o officer is di for Rs. 55, deduction u incurred for ITA No.2600/Chny/
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a) of the Act, irrespective whether igible for weighted deduction u/s 35(2AB) ds support from the decision of the Hon'ble urt in the case of CIT vs Rajapalayam M the decided case, the assessee had claim he Act in respect of the expenditure, both at its R&D facility. Since the assessee w ons prescribed in Section 35(2AB) of the A uction was denied to it. The assessee had deduction us 35(1)(i) and 35(1)(iv) of the A and capital expenditure respectively. On to have upheld the allowance of deductio f the Act. On further appeal by the Reve
High Court upheld the order of this Tribuna esent Appeal has been filed by the Re
0-A of the Income Tax Act by raising t substantial questions of law arising from the Income Tax Appellate Tribunal dated 3
learned Tribunal upheld the order of ner of Income Tax (Appeals) and he e incurred by the Assessee on Scientific R d to weighted deduction of 1.5 times u f the Act as the Project in question w y the Competent Authority, however, the A normal deduction of 100% of expenditure on 35(1)(i) of the Act.
arned Commissioner of Income Tax (A the above aspect in his order dated 31
-- considering the submissions I find that t rightly rejected the claim of the appellant as no approval from the prescribed author mpletion of assessment. Having regard t d that the assessing officer had no occasio of the appellant. In the circumstances, t rected to consider the claim of deduction
12,558/- representing R&D Revenue Exp u/s. 35(1)(iv) for Rs. 46,387/- representing r the purchase of Camera used in R&D unit.

/2024 (AY 2014-15) s. Ashok Leyland Ltd.
such capital of the Act or juri ictional ills Ltd. (265
med deduction revenue and was unable to Act, the claim alternatively
Act in respect appeal, this on at normal enue, we find al, by holding venue under the following m the order
31.7.2008, by the learned eld that the Research was nder Section was not duly
Assessee, was incurred only
Appeals) had 1.10.2006 as the assessing u/s. 32(2AB) rity as on the to alternative n to consider the assessing u/s. 35(1)(i) penditure and g expenditure
."

"(i) Whethe
Tribunal wa deduction b
Tax Act?
(ii) Whethe
Tribunal wa
Assessee h prescribed a 6. Having
Revenue, w
Appeal, sinc expenditure not even de viz., the Co and therefo further appe
35(l)(i) of Competent
7. Since the was not ev
ITA No.2600/Chny/
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r, the Revenue took up the matter before against the Revenue on the said aspect of g manner:-- onsidering the rival submission carefully, w as well as Sec.35(2AB) deal with the same tific expenditure consisting of revenue e and only difference is that Sect.35(1) at normal rate i.e., actual expenditu
B) allows deduction to be claimed at weig ect to fulfilment of certain conditions. There ong with the directions of the CIT(App
Officer to allow normal deduction unde in view of the fact that the Assessing O deduction for the Asst. Year 2005-06."
there was no issue about the claim the Revenue has still preferred the pre on 260A of the Act which was admitted by his Court by order dated 9.1.2009, by ubstantial questions of law:-- er, on the facts and circumstances of th as right in law in entertaining a change by the assessee from 35(2AB) to 35(1) of er, on the facts and circumstances of th as right in granting relief under Section 35
has not produced the relevant approv authorities for the claim of deduction?"
heard the learned Senior Standing Cou we are satisfied that there is no substance i ce the claim of weighted deduction at 1.5
e incurred by the Assessee on Scientific R ecided against the Revenue by the Appellat ommissioner of Income Tax (Appeals) and re, there was no occasion for the Revenue eal, as the expenditure was allowed only u the Act which does not require any app
Authority.
e spending of the amount on Scientific Re ven disputed by the Revenue, in our

/2024 (AY 2014-15) s. Ashok Leyland Ltd.
the Tribunal the matter in we agree that e expenditure and capital provides for ure whereas ghted rate of efore, we find peals) to the er Sec.35(1) fficer himself of weighted esent Appeal y a coordinate framing the he case, the e of claim of f the Income he case, the (1) when the al from the unsel for the n the present times of the Research was e Authorities, the Tribunal to prefer any under Section proval by the esearch itself opinion, the Appellate A 35(1)(i) of against that Competent
Therefore, arising in th
8. We do n
Revenue an is dismissed
No order as Assessee fo
4.8 In view of emerges is that, disable the asses expenditure, both
Act respectively.
is noted that the incurred at its authorities, whic certified by the s notice that the as Form 3CLA, whic expenditure of ca disclosure of R&
statements along certified in Form financial stateme details evidencing house R&D facil financial stateme certified the sam
According to us t establish that t incurred in relati deduction u/s 3
authorities to tha findings therefore for the capital R&
the Act, and Rs.70,14,85,411/
ground therefore
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uthorities have rightly allowed the claim u the Act. The Assessee has not preferred t finding and therefore, the question of ap
Authority for making such claim become we do not find any substantial question he present Appeal.
not find any merit in the present Appeal nd the same is liable to be dismissed and a d.
s to costs. A copy of this judgment may b orthwith."
the above decision supra, the legal po the denial of weighted deduction u/s 35( ssee from claiming normal deduction for t h revenue & capital, u/s 35(1)(i) and 35(
Now reverting back to the facts of the pre assessee had furnished the details of the approved in-house R&D facility before ch was inter alia included in the audit statutory auditor in Form 3CLA. It was br ssessee vide letter dated 05.03.2021 had f ch contained the details of R&D expenditu apital nature, consolidated claim stateme
&D expenditure in the notes to audi g with a reconciliation statement between m 3CLA and the figures reported in note ents. Having perused these details, we f g incurrence of capital expenditure at the ity was duly disclosed in the notes to ents and further the statutory auditor had me being relatable to scientific research in herefore, these contemporaneous evidence the capital expenditure of Rs.100,21,2
on to scientific research and was therefor
5(1)(iv) of the Act. Hence, the order o at extent stands reversed. 4.9 In view o e, we direct the AO to further allow norm
&D expenditure of Rs. 100,21,22,016/- u/s resultantly delete disallowance to the /- (Rs.100,21,22,016/- minus Rs.30,06,36
stands partly allowed.”

/2024 (AY 2014-15) s. Ashok Leyland Ltd.
under Section d any Appeal proval by the es irrelevant.
of law to be filed by the accordingly, it e sent to the osition which 2AB) will not the said R&D
(1)(iv) of the esent case, it e expenditure e the lower ted accounts rought to our furnished the ure, including nt, details of ted financial n the amount es to audited find that the approved in- the audited d verified and n Form 3CLA.
es sufficiently
2,016/- was re eligible for of the lower of our above mal deduction s 35(1)(iv) of e extent of 6,605/-). This 10. Following the abo the reasoning given disallowance made by t the Revenue are dismiss
11. Before parting, we any bearing on the cal while passing the rectif weighted deduction u/s by DSIR in Form 3CL.
12. In the result, the Order pronounced (जगदीश)
(JAGADISH)
लेखासद /ACCOUNTANT
चेई/Chennai,
दनांक/Dated: 02nd May, 20
TLN
आदेशक ितिलिपअेिषत/Copy

ITA No.2600/Chny/
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ove, we therefore see no reason to by the Ld. CIT(A) for deleting he AO. Overall therefore, all the gro sed.
e may clarify that, our above findin lculation mistakes, if any, committ fication order u/s 154 of the Act fo
35(2AB) in respect of the amount appeal filed by the Revenue stands d on the 02nd day of May, 2025, in C MEMBER
(एबीटी.
(ABY T. VA

याियकसदय/JUDI
025. to:
nai / Madurai / Salem / Coimbatore.

/2024 (AY 2014-15) s. Ashok Leyland Ltd.
o interfere with the impugned ounds raised by gs do not have ted by the AO, or allowing the since approved dismissed.
Chennai.
/-
वक
)
ARKEY)
CIAL MEMBER