Efftronics Systems Private Limited, Vijayawada V. Assistant Commissioner of income Tax, Circle-2(1), Vijayawada

CO 121/VIZ/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6351 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 26-11-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: V APPALA RAJU
• Keywords: Competent authority; Capital expenditure
• Section: 143(3); 147; 263; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 381 / VIZ /201 8 (ASST. YEAR : 20 12 - 13 ) ACIT, CIRCLE - 2(1), VIJAYAWADA. V S . M/S. EFFTRONICS SYSTEMS PVT. LTD., D.NO. 40 - 15 - 9, BRINDAVAN COLONY, LABBIPET, VIJAYAWADA. PAN NO. AAACE 4879 Q (APPELLANT) (RESPONDENT) C.O.NO. 121/VIZ/2018 (ARISING OUT OF ITA NO. 381 / VIZ /201 8) (ASST. YEAR : 20 12 - 13 ) M/S. EFFTRONICS SYSTEMS PVT. LTD., D.NO. 40 - 15 - 9, BRINDAVAN COLONY, LABBIPET, VIJAYAWADA. VS. ACIT, CIRCLE - 2(1), VIJAYAWADA. PAN NO. AAACE 4879 Q (APP LICANT ) (RESPONDENT) ASSESSEE BY : SHRI C. SUBRAHMANYAM , FC A. DEPARTMENT BY : SHRI V. APPALA RAJU , SR. DR DATE OF HEARING : 02 / 0 1 /201 9 . DATE OF PRONOUNCEMENT : 25 / 0 1 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME 2 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) TAX (APPEALS) , VIJAYAWADA , DATED 11 /0 5 /201 8 FOR THE ASSESSMENT YEAR 20 12 - 13 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF DESIGNING, DEVELOPMENT AND MANUFACTURING OF ELECTRONIC EQUIPMENT, LED DISPLAY SYSTEMS ETC. FOR INDIAN RAILWAYS & O THER INDUSTRIES , FILED ITS RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 11,7 7 ,530/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY THROUGH CASS AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 30/07/2014 DETERMINING TAXABLE INCOME OF RS. 29,09,367/ - BY MAKING CERTAIN ADDITIONS TOWARDS DISALLOWANCE OF EXPENDITURE. SUBSEQUENTLY, THE OR DER PASSED UNDER SECTION 143(3) , DATED 30/07/2014 WAS SUBJECT MATTER OF REVISION UNDER SECTION 263 OF THE ACT, VIDE ORDER DATED 14/03/2017 ON THE GROUND THAT THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVE NUE AND DIRECTED THE ASSESSING OFFICER TO EXAMINE THE ISSUE IN RESPECT OF CLAIM MADE BY THE ASSESSEE UNDER SECTION 35(2AB) OF THE ACT. 3 . SUBSEQUENTLY BY FOLLOWING THE DIRECTIONS GIVEN BY THE PR. CIT, THE ASSESSING OFFICER COMPLETED THE ASSESSMENT UNDER SECTION 147 R.W.S. 263 OF THE ACT ON 31/08/2017. IN THE ASSESSMENT ORDER , THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE IS 3 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) MANUFACTURING OFFICE MAC H INES AND APPARATUS INCLUDING ALL MACHINES AND APPARATUS USED IN RAILWAY STATIONS FOR OFFICE WORK AND FOR DATA PROCESSING ARE CLEARLY AS ITEM UNDER 11 TH SCHEDULE AND , AS THE ASSESSEE IS PRIMARILY INVOLVED IN MANUFACTURING OF PRODUCTS I.E. DAT A LOGGERS AND ELECTRONIC MOVING DISPLAY BOARDS THAT ARE APPAR ATUS INSTALLED IN RAI L WAY STATIONS, IT CANNOT C LAI M ANY BENEFIT UNDER THE PROVISIONS OF SECTION 35(2AB) OF THE ACT. HE FURTHER OBSERVED THAT FOR THE ASSESSMENT YEAR 2011 - 12, THE ITAT HAS ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 35(2AB), HOWEVER, AG AINST THE SAME , THE DEPARTMENT CARRIED THE MATTER IN APPEAL BEFORE THE HON'BLE HIGH COURT. THEREFORE, THE ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. 4 . ON APPEAL BEFORE THE LD. CIT(A), IT WAS SUBMITTED THAT THE ISSUE INVOLVED IS SQUARELY COVERED BY THE DECISION OF ITAT, VISAKHAPATNAM BENCH IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2011 - 12 IN ITA NO. 188/VIZ/2015 & 2016/VIZ/2015 BY ORDER DATED 21/010/2016 . THE LD. CIT(A) BY CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE AND BY FOLLOWING THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2011 - 12 , DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. THE RELEVANT PORTION OF THE LD. CIT(A)S ORDER IS EXTRAC TED AS UNDER: - 4 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) PARA 15: HAVING HEARD BOTH THE PARTIES, WE FIND FORCE IN THE ARGUMENTS OF THE LD. A. R. FOR THE ASSESSEE FOR THE REASON THAT THE PROVISIONS OF SECTION 35('2AB) OF THE ACT, WITH RELEVANT RULES MAKES IT MANDATORY FOR THE ASSESSEE COMPANY TO F ILE ITS APPLICATION FOR APPROVAL OF ITS IN HOUSE R&D BEFORE THE SECRETARY, DSIR, GOVERNMENT OF INDIA. THE APPLICANT COMPANY SHOULD ALSO SUBMIT AN UNDERTAKING AS PER PARA - C OF FORM NO. 3CK TO MAINTAIN SEPARATE ACCOUNTS FOR EACH R&D CENTRE APPROVED U/C. 35(2 AB) OF THE ACT BY THE PRESCRIBED AUTHORITY AND TO GET ACCOUNTS DULY AUDITED EVERY YEAR BY AN AUDITOR AS DEFINED IN SUB SECTION (2) OF SECTION 288 OF THE ACT. THE COMPANY SHOULD ENTER INTO AN AGREEMENT WITH THE PRESCRIBED AUTHORITY (SECRETARY, DSIR) FOR COO PERATION IN SUCH RESEARCH AND DEVELOPMENT FACILITY AND FOR AUDIT OF THE ACCOUNTS MAINTAINED FOR THAT FACILITY AS PER FORM GIVEN IN PARA - B OF FORM 3CK. THE SECRETARY, DSIR AFTER SATISFIED WITH THE DETAILS FURNISHED BY THE ASSESSEE AND ALSO AFTER COMPLIED WI TH THE CONDITIONS PRESCRIBED UNDER THE PROVISIONS OF SECTION 35(2AB) OF THE ACT AND RULES THERE UNDER PASS AN ORDER OF APPROVAL INFORM NO. 3CM BY DULY INTIMATING SUCH APPROVAL TO THE DIRECTOR GENERAL OF INCOME TAX (EXEMPTION) IN FORM NO. 3C'L WITHIN 60 DAY S OF GRANTING APPROVAL. ONCE, THE R&D FACILITY IS APPROVED BY THE COMPETENT AUTHORITY AND ASSESSEE HAS COMPLIED WITH THE PRESCRIBED RULES, THE A. 0. IS BOUND TO ALLOW THE DEDUCTIONS CLAIMED U/S. 35(2AB) OF THE ACT, IF HE IS SATISFIED THAT THE ASSESSEE FACI LITY IS APPROVED BY THE COMPETENT AUTHORITY. IN CASE THE A. 0. IS HAVING ANY DOUBT WITH REGARD TO THE GOODS MANUFACTURED BY THE ASSESSEE OR EXPENDITURE CLAIMED, THE A.0. IS BOUND TO REFER THE MATTER BACK TO THE COMPETENT AUTHORITY THROUGH APPROPRIATE AUTHO RITY I.E. THE CENTRAL BOARD OF DIRECT TAXES ('C'BDT) AND SEEK CLARIFICATIONS. THUS, IT WOULD EMERGE FROM ABOVE ANALYSIS TH AT NEITHER THE A. 0. NOR THE BOARD WAS COMPETENT TO TAKE ANY DECISION OF ANY SUCH CONTROVERSY RELATING TO REPORT AND APPROVAL GRANTED B Y THE PRESCRIBED AUTHORITY AS IT INVOLVED EXPERT VIEW OR OPINION. IT WAS PRESCRIBED AUTHORITY ALONE WHICH WOULD BE COMPETENT TO TAKE DECISION WITH REGARD TO THE CORRECTNESS OR OTHERWISE AND ITS ORD ER OF APPROVAL GRANTED IN FORM N O. 3CL AS PRESCRIBED U/S. 3 5('2AB) OF THE ACT READ WITH RULE 7A OF THE INCOME TAX RULES, 1962. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE A. 0. WITHOUT FOLLOWING THE PROCEDURE LAID DOWN UNDER RULES, SIMPLY DISALLOWED THE EXPENDITURE CLA IMED BY THE ASSESSEE BY HOLDING THAT THE GOODS MANUFACTURED BY THE ASSESSEE ARE MERE OFFICE MACHINES AND APPARATUS LISTED IN ELEVENTH SCHEDULE. THEREFORE, WE ARE OF THE VIEW THAT THE A. 0. IS NOT CORRECT IN DISALLOWING THE CLAIM MADE BY THE ASSESSEE U/S. 35 (2AB) OF THE ACT. PARA. 20: CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO RESPECTFULLY FOLLOWING THE RATIOS OF DECISIONS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE A. 0. ERRED IN DISALLOWING THE WEIGHTED DEDUCTION CLAIMED BY THE ASSESSEE UNDER THE PROVISIONS OF SECTION 35(2AB) OF THE ACT, DESPITE THE ASSESSEES R&D FACILITY WAS APPROVED BY THE COMPETENT 5 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) AUTHORITY. WE FURTHER WERE OF THE VIEW THAT THE GOODS MANUFACTURED BY THE ASSESSEE ARE NOT A MERE OFFICE MACHINES OR APPARATUS AS LISTED IN ELEVENTH SCHEDULE, BUT THEY ARE SPECIALLY DESIGNED ELECTRONIC EQUIPMENTS MEANT FOR USE BY INDIAN RAILWAYS TO MONITOR SMOOTH MOVEMENT OF TRAINS. THE ASSESSEE HAS CATEGORICALLY PROVED BY FILING NECESSARY EVIDENCES OF APPROVAL GRANTED BY THE PRESCRIBED AUTHORITY AND ALSO RETURNS FILED ANNUALLY TO THE PRESCRIBED AUTHORITY TO JUSTIFY THE EXPENDITURE INCURRED TOWARDS R&D EXPENDITURE. IN OUR CONSIDERED VIEW, THE COMPETENT AUTHORITY HAS TO D ECIDE WHETHER A PARTICULAR EXPE NDITURE IS ELIGIBLE FOR DEDUCTION ,, U/S. 35(2AB) OF THE ACT OR NOT, BUT NOT THE ASSESSING OFFIC ER. IN THE PRESENT CASE, THE A. 0. WITHOUT FOLLOWING THE DUE PROCEDURE LAID DOW N UNDER THE PROVISIONS OF THE ACT AND RULES THERE U NDER, SIMPLY DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESS EE. THEREFORE, WE DIRECT THE A. 0. TO ALLOW THE WEIGHTED DEDUCTION CLAIMED BY THE ASSESSEE UNDER THE PROVISIONS OF SECTION 35(2AB) (1) OF THE ACT.' 7.2 R&D FACILITY OF THE APPELLANT WAS APPROVED BY COMPETENT AUTHORITY FOR THE PURPOSE OF SECTION 35(2AB) OF THE ACT FOR THE PERIOD 01.04.2012 TO 31 .03.2016. THE COPY OF APPROVAL IN FORM NO. 3CM IS REPRODUCED BELOW: 7.3. IN VIEW OF THE ABOVE ITAT DECISION AND THE FACT THAT APPELLANTS R& D FACILITY WAS APPROVED BY THE COMPETENT AUTHORITY FOR THE PURPOSE OF SECTION 35(2AB) FOR THE 6 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) PERIOD 01/04/2012 TO 31/03/2016, I DIRECT THE ASSESSING OFFICER TO DELETE ADDITION OF RS. 2,49,61,840/ - MADE IN THE ASSESSMENT ORDER AS THE ISSUE INVOLVED FOR THI S ASSESSMENT YEAR 2012 - 13 IS IDENTICAL TO THE ISSUE DECIDED BY THE HON'BLE ITAT FOR ASSESSMENT YEAR 2011 - 12. GROUNDS OF APPEAL NUMBER 2 IS ALLOWED. 5. ON BEING AGGRIEVED , REVENUE CARRIED THE MATTER IN APPEAL BEFORE THE TRIBUNAL . 6 . LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER . 7 . ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE ORDER OF THE LD. CIT(A) AND ALSO THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO S . 61 TO 63 & 551/ 2017 FOR THE ASSESSMENT YEARS 2008 - 09 TO 2010 - 11 & 2013 - 14 , DATED 09/03/2018. 8 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 9. THE ONLY ISSUE INVOLVED IN THIS APPEAL IS WHETHER ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 35(2AB) OF THE ACT OR NOT. THE SAME ISSUE HAS BEEN CONSIDERED BY THE ITAT , VISAKHAPATNAM BENCH IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2011 - 12 IN ITA NO S . 188 & 216/VIZ/2015 BY ORDER DATED 21/10/2016. THE VERY SAME DECISION HAS BEEN FOLLOWED BY THE TRIBUNAL FOR THE ASSESSMENT YEAR S 2008 - 09 TO 2010 - 11 & 2013 - 14 IN ITA NOS. 61 TO 63 & 551/2017 AND HELD THAT ASSESSEE IS ELIGIBLE FOR CLAIM OF 7 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) DEDUCTION UNDER SE CTION 35(2AB). FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 13. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE WITH REG ARD TO THE ALLOWABILITY OF DEDUCTION U/S 35(2AB) OF THE ACT IN THE CASE OF THE ASSESSEE WAS EXAMINED BY THE TRIBUNAL IN THE ASSESEES OWN CASE FOR THE ASSESSMENT YEAR 2011 - 12, WHICH IS CITED (SUPRA). FOR READY REFERENCE, WE EXTRACT RELEVANT PARAGRAPH OF T HE ORDER OF THE LD. CIT(A) IN PARA NOS.7.1 TO 7.3, WHICH READS AS UNDER; 7.1 HON'BLE ITAT, VISAKHAPATNAM IN APPELLANT'S OWN CASE FOR EARLIER ASSESSMENT YEAR 2011 - 12 IN ITS ORDER DATED 21.10.2016 IN ITA NO. 188 /VIZAG/2015 & 21 6/VIZAG /2015 HELD THE FOLLOWING: 'PARA 15: HAVING HEARD BOTH THE PARTIES, WE FIND FORCE IN THE ARGUMENTS OF THE LD. A. R. FOR THE ASSESSEE FOR THE REASON THAT THE PROVISIONS OF SECTION 35('2AB) OF THE ACT, WITH RELEVANT RULES MAKES IT MANDATORY FOR THE ASSESSEE COMPAN Y TO FILE ITS APPLICATION FOR APPROVAL OF ITS IN HOUSE R&D BEFORE THE SECRETARY, DSIR, GOVERNMENT OF INDIA. THE APPLICANT COMPANY SHOULD ALSO SUBMIT AN UNDERTAKING AS PER PARA - C OF FORM NO. 3CK TO MAINTAIN SEPARATE ACCOUNTS FOR EACH R&D CENTRE APPROVED U/C . 35(2AB) OF THE ACT BY THE PRESCRIBED AUTHORITY AND TO GET ACCOUNTS DULY AUDITED EVERY YEAR BY AN AUDITOR AS DEFINED IN SUB SECTION (2) OF SECTION 288 OF THE ACT. THE COMPANY SHOULD ENTER INTO AN AGREEMENT WITH THE PRESCRIBED AUTHORITY (SECRETARY, DSIR) F OR COOPERATION IN SUCH RESEARCH AND DEVELOPMENT FACILITY AND FOR AUDIT OF THE ACCOUNTS MAINTAINED FOR THAT FACILITY AS PER FORM GIVEN IN PARA - B OF FORM 3CK. THE SECRETARY, DSIR AFTER SATISFIED WITH THE DETAILS FURNISHED BY THE ASSESSEE AND ALSO AFTER COMPL IED WITH THE CONDITIONS PRESCRIBED UNDER THE PROVISIONS OF SECTION 35(2AB) OF THE ACT AND RULES THERE UNDER PASS AN ORDER OF APPROVAL INFORM NO. 3CM BY DULY INTIMATING SUCH APPROVAL TO THE DIRECTOR GENERAL OF INCOME TAX (EXEMPTION) IN FORM NO. 3C'L WITHIN 60 DAYS OF GRANTING APPROVAL. ONCE, THE R&D FACILITY IS APPROVED BY THE COMPETENT AUTHORITY AND ASSESSEE HAS COMPLIED WITH THE PRESCRIBED RULES, THE A. 0. IS BOUND TO ALLOW THE DEDUCTIONS CLAIMED U/S. 35(2AB) OF THE ACT, IF HE IS SATISFIED THAT THE ASSESSE E FACILITY IS APPROVED BY THE COMPETENT AUTHORITY. IN CASE THE A. 0. IS HAVING ANY DOUBT WITH REGARD TO THE GOODS MANUFACTURED BY THE ASSESSEE OR EXPENDITURE CLAIMED, THE A.0. IS BOUND TO REFER THE MATTER BACK TO THE COMPETENT AUTHORITY THROUGH APPROPRIATE AUTHORITY I.E. THE CENTRAL BOARD OF DIRECT TAXES 8 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) ('C'BDT) AND SEEK CLARIFICATIONS. THUS, IT WOULD EMERGE FROM ABOVE ANALYSIS TH AT NEITHER THE A. 0. NOR THE BOARD WAS COMPETENT TO TAKE ANY DECISION OF ANY SUCH CONTROVERSY RELATING TO REPORT AND APPROVAL GRA NTED BY THE PRESCRIBED AUTHORITY AS IT INVOLVED EXPERT VIEW OR OPINION. IT WAS PRESCRIBED AUTHORITY ALONE WHICH WOULD BE COMPETENT TO TAKE DECISION WITH REGARD TO THE CORRECTNESS OR OTHERWISE AND ITS ORD ER OF APPROVAL GRANTED IN FORM N O. 3CL AS PRESCRIBED U/S. 35('2AB) OF THE ACT READ WITH RULE 7A OF THE INCOME TAX RULES, 1962. IN THE PRESENT CASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE A. 0. WITHOUT FOLLOWING THE PROCEDURE LAID DOWN UNDER RULES, SIMPLY DISALLOWED THE EXPENDITU RE CLAIMED BY THE ASSESSEE BY HOLDING THAT THE GOODS MANUFACTURED BY THE ASSESSEE ARE MERE OFFICE MACHINES AND APPARATUS LISTED IN ELEVENTH SCHEDULE. THEREFORE, WE ARE OF THE VIEW THAT THE A. 0. IS NOT CORRECT IN DISALLOWING THE CLAIM MADE BY THE ASSESSEE U /S. 35(2AB) OF THE ACT. PARA. 20: CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO RESPECTFULLY FOLLOWING THE RATIOS OF DECISIONS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THE A. 0. ERRED IN DISALLOWING THE WEIGHTED DEDUCTION CLAIMED BY THE ASSESSEE UNDER THE PROVISIONS OF SECTION 35(2AB) OF THE ACT, DESPITE THE ASSESSEES R&D FACILITY WAS APPROVED BY THE COMPETENT AUTHORITY. WE FURTHER WERE OF THE VIEW THAT THE GOODS MANUFACTURED BY THE ASSESSEE ARE NOT A MERE OFFICE MACHINES OR APPARATUS AS LISTED IN ELEVENTH SCHEDULE, BUT THEY ARE SPECIALLY DESIGNED ELECTRONIC EQUIPMENTS MEANT FOR USE BY INDIAN RAILWAYS TO MONITOR SMOOTH MOVEMENT OF TRAINS. THE ASSESSEE HAS CATEGORICALLY PROVED BY FILING NECESSARY EVIDENCES OF APPROVAL GRANTED BY THE PRESCRIBED AUTHORITY AND ALSO RETURNS FILED ANNUALLY TO THE PRESCRIBED AUTHORITY TO JUSTIFY THE EXPENDITURE INCURRED TOWARDS R&D EXPENDITURE. IN OUR CONSIDERED VIEW, THE COMPETENT AUTHORITY HAS TO D ECIDE WHETHER A PARTICULAR EXPE NDITURE IS ELIGIBLE FOR DEDUCTION ,, U/S. 35(2AB) OF THE ACT OR NOT, BUT NOT THE ASSESSING OFFIC ER. IN THE PRESENT CASE, THE A. 0. WITHOUT FOLLOWING THE DUE PROCEDURE LAID DOW N UNDER THE PROVISIONS OF THE ACT AND RULES THERE U NDER, SIMPLY DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESS EE. THEREFORE, WE DIRECT THE A. 0. TO ALLOW THE WEIGHTED DEDUCTION CLAIMED BY THE ASSESSEE UNDER THE PROVISIONS OF SECTION 35(2AB) (1) OF THE ACT.' 7.2 R&D FACILITY OF THE APPELLANT WAS APPROVED B Y COMPETENT AUTHORITY FOR THE PURPOSE OF SECTION 35(2AB) OF THE ACT FOR THE PERIOD 01.04.2012 TO 31 .03.2016. THE COPY OF APPROVAL IN FORM NO. 3CM IS REPRODUCED BELOW: 9 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) 7.3 IN VIEW OF THE ABOVE ITAT DECISION AND THE FACT THAT APPELLANTS R& D FACILITY WAS APPROVED BY THE COMPETENT AUTHORITY FOR THE PURPOSE OF SECTION 35(2AB) FOR THE PERIOD 1.4.2012 TO 31.3.2016, I DIRECT THE ASSESSING OFFICER TO DELETE ADDITION OF ` 1,34,30,935/ - MADE IN THE ASSESSMENT ORDER AS THE ISSUE INVOLVED FOR THIS ASST. YEAR 2013 - 14 IS IDENTICAL TO THE ISSUE DECIDED BY HONBLE ITAT FOR ASST. YEAR 2011 - 12. GROUNDS OF APPEAL NUMBERS 2 & 3 ARE ALLOWED. 14. DURING THE APPEAL HEARING, THE LD. D. R. DID NOT FURNISH ANY EVIDENCE OR THE CASE LAW OF ANY HIGHER JUDICIAL AUTHORITY TO CONTROVERT THE FINDING OF THE LD. CIT(A).THE LD.CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE R&D FACILITY WAS APPROVED FOR THE PERIOD 1.4.2012 TO 31.3.2016. THEREFORE, RESPECTFULLY FOLLOWING THE VIEW TAKEN BY THIS TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE EARLIER ASSESSMENT YEAR, WE HOLD THAT THE ASSESSEE IS ELIGIBLE 10 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) FOR DEDUCTION U/S 35(2AB) OF THE ACT AND THE APPEAL OF THE REVENUE IS DISMISSED ON THIS GROUND. 15. GRO UND NO.2 IS RELATED TO THE ALLOWABILITY OF CAPITAL EXPENDITURE INCURRED AS RESEARCH DEVELOPMENT AMOUNTING TO RS.3,92,636/ - . DURING THE ASSESSMENT PROCEEDINGS, THE A.O. FOUND THAT THE ASSESSEE HAS DEDUCTED A SUM OF RS.3,92,636/ - TOWARDS CAPITAL EQUIPMENT. HENCE, THE ASSESSING OFFICER TREATED THE EXPENDITURE AS A CAPITAL EXPENDITURE AND DISALLOWED THE SAME. 10 . NO MATERIAL HAS BEEN BROUGHT TO OUR NOTICE TO SHOW THAT THE ABOVE SAID ORDER HAS BEEN MODIFIED OR REVERSED BY THE HON'BLE JURISDICTIONAL HIGH COURT. FURTHER, LD. DEPARTMENTAL REPRESENTATIVE COULD POINT OUT ANY CONTRARY DECISION. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE, WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE REVENUE IS DISMISSED. 11 . THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A) . AS THE ASSESSEE HAS NO GRIEVANCE AGAINST THE ORDER OF LD. CIT(A) , THE CROSS OBJECTION FILE D BY THE ASSESSEE HAS BECOME INFRUCTUOUS AND IS DISMISSED ACCORDINGLY . 12. IN THE RESULT, APPEAL FILED BY THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 5 T H DAY OF JAN . , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 5 T H JAN . , 201 9 . 11 ITA NO. 381/VIZ/2018 & C.O.NO. 121/VIZ/2018 ( M/S. EFFTRONICS SYSTEMS PVT. LTD. ) VR/ - COPY TO: 1. THE ASSESSEE M/S. EFFT RONICS SYSTEMS PVT. LTD., D.NO. 40 - 15 - 9, BRINDAVAN COLONY, LABBIPET, VIJAYAWADA. 2. THE REVENUE ACIT, CIRCLE - 2(1), VIJAYAWADA. 3. THE PR. CIT , VIJAYAWADA. 4. THE CIT(A) , VIJAYAWADA. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.