DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, AURANGABAD, AURANGABAD vs. ENDURANCE TECHNOLOGIES LIMITED, AURANGABAD

ITA 1661/PUN/2024Status: DisposedITAT Pune25 August 2025AY 2016-1773 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the issue regarding the validity of the assessment order passed on a non-existing entity was not decided by the CIT(A)/NFAC and was not raised before the Tribunal. Therefore, this issue was left undecided. Regarding the deduction under Section 35(2AB), the Tribunal upheld the order of the CIT(A)/NFAC, allowing the weighted deduction. The reasoning was that the assessee had made all required compliances to get approval, submitted all relevant documents to DSIR, and had received Form 3CM for other periods, indicating consistent activity. The non-issuance of Form 3CM for the period under consideration was considered a procedural lapse on the part of DSIR, and information obtained under the Right to Information Act suggested that DSIR had processed the form. The Tribunal found no infirmity in the CIT(A)/NFAC's decision to allow the deduction. Similarly, the addition of Rs. 4,24,156/- under Section 35(1)(iv) was deleted, upholding the CIT(A)/NFAC's finding that the assessee, following the mercantile system of accounting, had correctly capitalized assets on the basis of put to use and claimed deduction as per law. The Revenue could not controvert these findings. Consequently, all appeals filed by the Revenue were dismissed.

What were the facts?

The Revenue filed a batch of 8 appeals challenging orders of the CIT(A)/NFAC for assessment years 2011-12 to 2018-19. The assessee, a company manufacturing automobile parts, initially claimed deduction under Section 80IC. Subsequently, assessments were reopened under Section 147, with the Assessing Officer (AO) disallowing a deduction of Rs. 2,63,91,741/- claimed under Section 35(2AB) for want of a report in Form 3CL from the prescribed authority (DSIR). The assessee argued that all compliances were made, and the non-issuance of Form 3CL was a procedural lapse by DSIR. The assessee also challenged the validity of the assessment order passed on a non-existent entity due to a merger. The CIT(A)/NFAC allowed the deduction under Section 35(2AB) and also deleted an addition of Rs. 4,24,156/- made by the AO on account of alleged excess deduction claimed under Section 35(1)(iv).

What were the issues?

1. Whether the assessment order passed on a non-existing entity, High Technology Transmission System India Pvt. Ltd., which had merged with Endurance Technologies Limited, is invalid in law, as argued by the assessee, relying on the Supreme Court decision in PCIT vs. Maruti Suzuki India Ltd. and other precedents. 2. Whether the assessee is eligible for weighted deduction under Section 35(2AB) of the Income Tax Act, 1961, for the amount of Rs. 2,63,91,741/-, despite the absence of a report in Form 3CL from the DSIR, considering the assessee's arguments of compliance and procedural lapse by DSIR. 3. Whether the addition of Rs. 4,24,156/- made by the AO on account of alleged excess deduction claimed under Section 35(1)(iv) of the Act is justified, considering the assessee's claim based on mercantile system of accounting and capitalization of assets on the basis of put to use. Assessee's Contentions: - The assessment order is invalid as it was passed on a merged entity. - All compliances for Section 35(2AB) deduction were made; non-issuance of Form 3CL is a procedural lapse by DSIR. - The deduction under Section 35(1)(iv) was correctly claimed as per the mercantile system of accounting and capitalization of assets on put to use basis. Revenue's Contentions: - The Revenue argued that the deduction under Section 35(2AB) was not allowable due to the absence of Form 3CL. - The Revenue contended that the addition of Rs. 4,24,156/- under Section 35(1)(iv) was rightly made as the assessee claimed excess deduction not in accordance with the provisions of the section.

Which sections of the Income-tax Act were involved?

Section 80IC,Section 35(2AB),Section 143(1),Section 143(3),Section 147,Section 148,Section 35(1)(iv),Section 37(1),Section 271(1)(c)

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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE

Before: SHRI R. K. PANDA & MS. ASTHA CHANDRA

For Appellant: Shri Nikhil Pathak
For Respondent: Shri Amol Khairnar, CIT-DR

PER BENCH :

The above batch of 8 appeals filed by the Revenue are directed against the separate orders dated 13.06.2024 and 10.06.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment years as mentioned above. For the s

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