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Before: SHRI R. K. PANDA & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM
This appeal is filed by the Revenue against the order dated 24/4/2014 passed by CIT(A)-X, New Delhi.
The grounds of appeal
are as follows:-
1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in allowing deduction of rS.18,48,26,331/- after admitting Form 3CL, which was not submitted by the assessee during assessment proceedings, at appeal stage”
The assessee filed return of income declaring loss of Rs.38,26,25,252/- on 29/09/2009 Assessment was completed at a loss of Rs.19,77,98,920/- by disallowing the claim of deduction u/s 35(2AB) of Rs. 18,48,26,331/-. The assessee filed appeal before the CIT (A). The CIT (A) allowed the same. The Revenue is before us.
The Ld. AR pointed out that in the earlier Assessment Year 2005-06 the same issue is contested by the Revenue before the Hon'ble High Court and the same is dismissed by the Hon'ble Delhi High Court, in CIT Vs. Sandan Vikas (India) Ltd. (2012) 22 Taxman.com 90.
The Ld. DR could not distinguish the same.
We have heard both the parties, the issue related to Section 35(2AB) of the Income-tax Act was already challenged before this Tribunal in Assessment Year 2005-06 by the assessee and the ITAT has allowed the same in assessee’s favour (ITA No. 1105/Del/2009) the ITAT held as under:-
“7. We have heard the parties and have perused the material on record. The Ld.CIT(A), it is seen, has confirmed the disallowance, observing, inter alia, that the financial period involved was from 1/4/2004 to 31/3/2005, whereas the application for recognition of in-house R & D facility was made only on 10/1/2005, i.e, at the fag end of the Financial Year; that as admitted by the assessee itself vide its letter dated 13/1/2009, the prescribed Form No. 3 CL had not been issued by the Department of Science; that “CIT V. Claris Lifesciences Ltd.”(supra), was not applicable in that case, the application had been made and approval had been made in the same Financial Year, whereas in the assessee’s case there was a gap of two Financial Years between the making of the application and the grant of the approval.
8. The decision in “CIT Vs. Claris Lifesciences Ltd.” (Supra), has been reported in 221 CTR 301 (Guj). Therein, the Hon’ble Gujarat High Court has held the provisions of Section 35(2AB) do not state or imply that the R & D facility is to be approved from a particular date, or that it is only the date of approval that would be the cutoff date for eligibility of weighted deduction on the expenses incurred from that date onwards; that a plain reading of the Section shows that the assessee has to develop the facility, which pre-supposes incurring the expenditure in this behalf, application to the prescribed Authority, who, after following the proper procedure, will
approve the facility, or otherwise, and the assessee will be entitled to weighted deduction of any and all expenditure so incurred.
This decision, in our considered opinion, has wrongly been distinguished by the Ld. CIT(A) . It does not matter that in that case, the making of the application and the grant of approval came about in the same Financial Year, whereas in the assessee’s case, there was a gap of two Financial Years between the two acts. What is pertinent is that the assessee did make an application, which has been observed in the impugned order also. It is also a fact that the Form 3 CL was given by the Authority in the subsequent year. The Ld. CIT(A) has been of the opinion that it was at the fag end of the assessee that the assessee made the application. This, however, does not act prejudicially to the assessee.
In view of “CIT(A) Vs. Claris Lifesciences Ltd.” (Supra), therefore, the assessee is entitled to weighted deduction claimed u/s 35(2AB) of the Act and we hold so. The grievance of the assessee is, as such, found to be justified and is accepted as such.”
The same was confirmed by the Hon’ble Delhi High Court. The issue involved in this appeal is similar to that of for the Assessment Year 2005-06. Therefore, the appeal of the Revenue is dismissed.
In the result, appeal is dismissed.
Order pronounced in the Open Court on 22nd MAY, 2017.