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Facts
The assessee, engaged in manufacturing industrial catalysts, filed its ROI for AY 2017-18. During scrutiny, the AO disallowed Rs. 8,15,000 claimed under Section 35(2AB) due to excess capital expenditure reflected in Form 3CL. This disallowance was upheld by the CIT(A).
Held
The Tribunal confirmed the disallowance under Section 35(2AB) due to the admitted excess claim in Form 3CL. However, the alternative claim for allowance under Section 35(1)(iv) and the claim for deduction under Section 80G were restored to the AO for fresh examination in accordance with law.
Key Issues
Whether the disallowance of Rs. 8,15,278 under Section 35(2AB) was justified due to excess claim; and whether the alternative claim under Section 35(1)(iv) and deduction under Section 80G should be allowed.
Sections Cited
35(2AB), 35(1)(iv), 80G
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Inturi Rama Rao & Shri Prakash Chand Yadav
ORDER Per Prakash Chand Yadav, JM :
The present appeal of the assessee is arising from the order of the National Faceless Appeal Centre / learned Commissioner of Income-tax (Appeals) ["CIT(A)" for short] dated 15.10.2024, having DIN & Order No.ITBA/NFAC/S/250/2024-25/1069682873(1) and relates to the assessment year 2017-2018.
The solitary issue involved in this appeal is disallowance of an amount of Rs.8, 15,278 under Section 35(2AB) of the Act.
The brief facts of the case as coming out from the orders of the authorities below are that the assessee is a company engaged in the manufacture and sale of industrial grade catalysts for petrochemical refineries, fertilizer manufacturers, etc. It filed its return of income on 30th November, 2017, which was subsequently revised on 30th March, 2019 determining an income of Rs.151 crore. The case of the assessee was selected for scrutiny and thereafter, assessment has been framed. During the course of assessment proceedings, the AO disallowed the amount of Rs.8,15,000 claimed by the assessee in terms of the provisions of Section 35(2AB) of the Act on the ground that on perusal of Form 3CL issued by Department of Scientific and Industrial Research, the assessee has claimed capital expenditure in excess and hence the excess expenditure deserves disallowance. The CIT(A) affirmed the order of the AO.
Aggrieved with the order of the CIT(A), the assessee has come up in appeal before us. The learned Counsel for the assessee alternatively argued that the expenses incurred by the assessee deserve to be allowed in terms of the provisions of Section 35(1)(iv) of the Act.
The learned CIT-DR relied upon the orders of the authorities below.
We have heard the rival submissions and perused the material available on record. It is an admitted position of fact that the assessee has made some excess claim in Form 3CL, which is mandatorily to be filed with effect from assessment year 2017-2018. Therefore, the assessee is not entitled to the claim of Section 35(2AB) of the Act. However, so far as the alternative claim of the assessee is concerned, we restore this matter to the file of the AO for examining afresh in the light of the provisions of Section 35(1)(iv) of the Act.
In other ground, the assessee has claimed deduction of Section 80G. We also restore this issue to the file of the AO and in case the assessee is able to submit the certificate of 80G, then the AO will decide the issue in accordance with law.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes.
Order pronounced on this 26th day of May, 2025.