THEJO ENGINEERING LTD,CHENNAI vs. ACIT CORPORATE CIRCLE 3(4), CHENNAI

This appeal by the assessee is directed against the order passed by the learned Commissioner of Income Tax(Appeals)-11, Chennai, dated 28.06.2017 in for the assessment year 2014-15 passed U/s. 250(6) r.w.s. 143(3) of the Act.

The appeal was filed by the assessee with a delay of one day. The assessee has submitted an affidavit before us stating that the Senior Manager Accounts who is dealing with the matter went on official tour without intimating the concerned officer by oversight, due to which the delay had occurred. Hence it was pleaded that the delay of one day in filing the appeal may be condoned. The Ld. DR strongly objected to the submission of the Ld. AR. However, after hearing both sides, though we do not appreciate the lapse on the part of the assessee, in the interest of justice, we hereby condone the delay in filing the appeal and proceed to hear the matter on merits.

The assessee has raised three grounds in its appeal however the crux of the issue is that the Ld.CIT(A) has erred in disallowing the claim of deduction U/s.35(1)(iv) of the Act with respect to the amount that is not approved by DSIR for claiming weighted deduction U/s.35(2AB) of the Act.

The brief facts of the case are that the assessee is a limited company engaged in the business of providing engineering solutions, filed its return of income for the assessment year 2014-15 on 29.11.2014 admitting total income of Rs.11,22,49,820/-. Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny under CASS. Notice U/s.143(2) of the Act was served on 18.09.2015. Finally assessment order was passed U/s.143(3) of the Act on 30.12.2016 wherein the Ld.AO had made addition of Rs.64,780/- towards disallowance U/s. 36(1)(va) r.w.s. 2(24)(x) of the Act and Rs.70,71,556/- towards disallowance of deduction claimed U/s.35(2AB) of the Act.

During the course of scrutiny assessment proceedings it was observed by the Ld.AO that the assessee company had claimed weighted deduction @ 200% in respect of expenditure incurred towards scientific research and development U/s.35(2AB) of the Act as detailed below:- Expenditure Eligible Deduction Amount Debited to P & L a/c Revenue expenditure 56,54,658 1,13,09,316 56,54,658 Capital expenditure 7,08,449 14,16,898 0 Total 63,63,107 1,27,26,214 56,54,658 Balance amount 70,71,556 deductible u/s 35

Before us, the Ld.AR relied in the decision of the case ACIT vs. Bhagiradha Chemicals & Industries Ltd., wherein it was held that merely because part of the expenditure was rejected by the prescribed authority for claiming deduction U/s.35(2AB) of the Act, it would not render the same to be ineligible for deduction U/s.35(1)(iv) of the Act. On perusing the order of the Ld.AO and the Ld.CIT(A), we find that the decision of the Tribunal cited supra has not been considered by the Ld.Revenue Authorities while deciding the case of the assessee. Therefore in the interest of justice, we hereby remit back the matter to the file of Ld.AO to consider the alternate claim made by the assessee before the Ld.CIT(A) in the light of the decision of the Tribunal cited supra and thereafter pass appropriate order in accordance with merit and law.

In the result appeal of the assessee is allowed for statistical purposes as indicated herein above.