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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
ORDER / आदेश Per Rajesh Kumar, AM: This is the appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi (hereinafter referred to as the Ld. CIT(A)”] dated 24.06.2022 for the AY 2017-18.
Issue raised in ground no.1 is reproduced as under:
For that the Ld. CIT(A) erred in confirming the action of AO in disallowing the entire claim of Rs. 10,30,324/- being deduction @ 200% of Rs. 5,15,162/- u/s 35(2AB) when 100% being actual expenses incurred was not disputed and should have been allowed as normal expenses.
2 Assessment Year: 2017-18 M/s Elin Electronics Ltd.
Facts in brief are that the assessee filed return of income on 15.09.2017 declaring total income of Rs. 9,51,60,840/-. The case of the assessee was selected for limited scrutiny and statutory notices were issued and duly served on the assessee. The assessee company is engaged in the business of manufacturing and dealing in electronics and allied products and also doing contractual job work. The AO observed on the basis of detailed computation of income filed by the assessee that it had claimed deduction u/s 35(2AB) to the tune of Rs. 11,04,78,324/- being 200% of Rs. 5,52,39,162/- te amount of expenditure incurred during the year.The assessee claimed the total expenditure in R & D to the tune of Rs. 5,52,39,162/- in the profit and loss account but as per Form 3CL received from SC-C, Department of Scientific Industrial Research, Govt. of India, the total R&D eligible expenditure was only to the tune of Rs. 5,47,24,000/- and accordingly the AO has held excess expenditure to the tune of Rs. 5,15,162 is not allowable and accordingly Rs. 10,30,324/- being the difference claim u/s 35(2AB) and the claim as was allowed by the Department of Scientific Industrial Research, Govt. of India as per Form 3CL was added to the income of the assessee.
The appeal of the assessee was also dismissed by the Ld. CIT(A) and the assessee is in appeal before us.
We have heard the rival submissions and perused the material on record. We find that as against the expenditure incurred of Rs. 5,52,39,162/- under the head R & D and charged in the profit and loss account, the prescribed authority approved Rs. 5,47,24,000/- only resulting into addition of Rs. 10,30,324/- which was also confirmed by the ld CIT(A). The arguments of the Ld. A.R. was that since he has incurred the expenses on R & D even if these are not approved in respect of weighted deduction, then the said expenditure may kindly be allowed to the assesse as expenses incurred for the prupose of business. The Ld. A.R submitted that even in the subsequent assessment years in AY 2018-19 and 2020-21 the AO has accepted the claim of the assessee in the assessment framed u/s 143(3) and the copies of the assessment orders
3 Assessment Year: 2017-18 M/s Elin Electronics Ltd. are filed at page 63 to 67 and 68 to 75 respectively. Since the AO has accepted the claim of the assessee during the assessment proceedings as stated hereinabove as genuine and being incurred in accordance with the provisions of the Act as the assessee has incurred the expenditure for the purpose of business only. Accordingly we set aside the order of Ld. CIT(A) and direct the AO to allow the deduction of Rs. 5,15,162/-. Accordingly the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 16th November, 2022