PRINCIPAL COMMISSIONER OF INCOME TAX - 4 vs. M/S KUMAR ORGANICS PRODUCTS LTD

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ITA/158/2021HC KarnatakaKAHC01055911201924 September 2024Bench: S.G.PANDIT,C.M. POONACHA5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court disposed of the appeal with liberty to the Revenue to revive it if it falls within exceptions to CBDT circulars regarding tax effect. The substantial questions of law were kept open for future adjudication.

What were the facts?

The Revenue appealed against an ITAT order allowing deduction under Section 35(2AB) of the Income Tax Act. The assessee had not submitted Form 3CL, which is required to qualify expenditure on scientific research.

What were the issues?

Whether deduction under Section 35(2AB) can be allowed without Form 3CL and fulfillment of all mandatory conditions, even if the R&D facility is approved by DSIR.

Which sections of the Income-tax Act were involved?

Section 35(2AB)

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:39766-DB ITA No. 158 of 2021

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 158 OF 2021 BETWEEN:

1.

PRINCIPAL COMMISSIONER OF INCOME TAX – 4, BMTC COMPLEX, KORMANAGALA, BENGALURU.

2.

DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), BMTC COMPLEX, KORMANAGALA, BENGALURU. …APPELLANTS (BY SRI SANMATHI E I, ADVOCATE)

AND:

1.

M/S KUMAR ORGANICS PRODUCTS LTD., 819/C, USHA KRISHAN CENTRE, 13TH CROSS, 7TH BLOCK, (WEST) JSS COLLEGE CIRCLE, JAYANAGAR BENGALURU-560082, PAN AAACK 6745P. …RESPONDENT (BY SRI S ANNAMALAI, ADVOCATE) THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 19/07/2019 PASSED IN ITA NO.1060/BANG/2019, FOR THE ASSESSMENT YEAR 2013-2014, PRAYING THIS HON’BLE COURT TO:

(A) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND ETC.

Digitally signed by MARIGANGAIAH PREMAKUMARI Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:39766-DB ITA No. 158 of 2021

THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER:

CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA

ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT)

Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Sri.S.Annamalai for respondent/assessee.

2.

The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 19.07.2019 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.1060/Bang/2019 for the assessment year 2013-14.

3.

This

Court,

admitted the appeal on 06.12.2021 to consider the following substantial question of law:

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NC: 2024:KHC:39766-DB ITA No. 158 of 2021

“1. Whether on the facts and circumstances of the case, the Tribunal is right in allowing deduction under section 35(2AB) of the Act when the assessee has failed to submit Form 3CL, which qualifies the quantum of expenditure incurred on scientific research by Department of Scientific and Industrial Research (DSIR) and even when the DSIR has not issued Form 3CL due to the failure of the assessee to submit the required documents and relevant details by way of audited accounts?

2.

Whether on the facts and circumstances of the case, the Tribunal is right in holding that once the Research and Development facility has been approved by the DSIR, the deduction under section 35(2AB) of the Act has to be allowed without satisfying the other conditions laid down in section 35(2AB) of the Act and when the mandatory conditions set out in section 35(2AB) of the Act are not fulfilled by the assessee?

3.

Whether on the facts and circumstances of the case, the Tribunal is right in not appreciating that the DSIR is

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NC: 2024:KHC:39766-DB ITA No. 158 of 2021

only appropriate Authority which certifies the expenditure incurred on scientific research and quantum of amount in Form 3CL for allowing deduction under section 35(2AB) of the Act and in the absence of such Form 3CL the weighted deduction under section 35(2AB) of the Act cannot be allowed?”

4.

Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue.

5.

On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024.

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NC: 2024:KHC:39766-DB ITA No. 158 of 2021

6.

In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding.

Sd/- (S.G.PANDIT) JUDGE

Sd/- (C.M. POONACHA) JUDGE

MPK CT:VN List No.: 2 Sl No.: 20

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