ROTOFILT ENGINEERS LIMITED,AHMEDABAD vs. THE ACIT, CIRCLE-3(1)(1), AHMEDABAD

Facts

M/s. Rotofilt Engineers Ltd., engaged in manufacturing energy-saving devices with an approved in-house R&D facility, sought deduction under section 35(2AB) of the Income Tax Act for AY 2012-13. Initially, the assessee withdrew its claim due to late DSRO approval but later revived it, relying on Gujarat High Court judgments. The Assessing Officer and CIT(A) disallowed the revised claim, citing lack of documentary evidence, alleged dual use of machinery for manufacturing, and prior claims under section 80IB, failing to conduct a de-novo assessment as previously directed by the Tribunal.

Held

The Tribunal ruled that the lower authorities mechanically relied on a quashed assessment order, disregarding its previous remand. It affirmed that delayed DSIR approval does not affect eligibility for section 35(2AB) deduction, referencing Gujarat High Court precedents. The Tribunal found no merit in arguments regarding dual-use machinery or double deductions for the same assets, as the assessee had restricted its claim and no evidence of double-claiming was presented. Consequently, the assessee's claim for deduction of ₹2,03,70,390/- under section 35(2AB) was allowed.

Key Issues

Whether the assessee is eligible for deduction under section 35(2AB) for in-house R&D expenditure despite delayed DSIR approval and allegations of dual-use machinery or prior 80IB claims, and if lower authorities complied with the ITAT's de-novo assessment directions.