COOPER CORPORATION PRIVATE LIMITED,SATARA V. NATIONAL EASSESSMENT CENTRE, NOT KNOWN

ITA 212/PUN/2025

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Cooper Corporation Pvt. Ltd. appealed against the order of the CIT(A) / NFAC, which confirmed the disallowance of a deduction of Rs.12,69,17,337 under section 35(2AB) of the Income Tax Act, 1961. This deduction was claimed for expenses incurred on in-house research and development. The primary contention was the absence of Form No.3CL, which certifies that actual research and development work was conducted during the year. The Tribunal noted that Form No.3CL was issued after the completion of both the assessment and appellate proceedings, and thus, restored the matter to the Assessing Officer for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 361361 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2020-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: KRISHNA V GUJARATHI
• Keywords: Opportunity of being heard; Revenue expenditure; Capital expenditure
• Section: 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.212/PUN/2025 Assessment year : 2020-21 Cooper Corporation Pvt. Ltd. M60-1, Nariman House, Additional MIDC, Vijay Nagar, Gojegaon B.O., Satara – 415004 Vs. DCIT, Satara Circle, Satara PAN: AAACC9687J (Appellant) (Respondent) Assessee by : Shri Krishna V Gujarathi Department by : Shri Amol Khairnar CIT-DR Date of hearing : 14-05-2025 Date of pronouncement : 22-05-2025 O R D E R PER R.K. PANDA, VP: This appeal filed by the assessee is directed against the order dated 03.12.2024 of the Ld. CIT(A) / NFAC, relating to assessment year 2020-21. 2. Although a number of grounds have been raised by the assessee, however, these all relate to the order of the Ld. CIT(A) / NFAC in confirming the disallowance of deduction of Rs.12,69,17,337/- u/s 35(2AB) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) being one and one-half times of the eligible expenditure of Rs.8,46,11,558/- incurred on in-house Research and Development facility. 2 ITA No.212/PUN/2025 3. Facts of the case, in brief, are that the assessee is a Private Limited company engaged in the business of manufacture and sale of various engine components. It filed its return of income for the year under consideration on 12.02.2021 declaring taxable income of Rs.40,53,11,570/- which was revised on 29.03.2021 declaring taxable income of Rs.40,23,86,800/-. The case of the assessee was selected for complete scrutiny under CASS. Accordingly, statutory notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee in response to which the AR of the assessee filed the requisite details from time to time. 4. During the course of assessment proceedings the Assessing Officer noted that the assessee has claimed deduction of Rs.12,69,17,337/- u/s 35(2AB) for in house research and development work in their in house research facility. The assessee company has claimed total expenses of Rs.8,46,11,588/- during the year on research and development (Rs.3,11,27,790/- as capital expenditure and Rs.5,34,83,768/- as revenue expenditure). On verification of submissions made by the assessee in support of claim of deductions the Assessing Officer noted that the assessee company has submitted form 3CM order of approval of In house Research Development facility from DSIR, Govt. of India. However, the assessee company has not furnished copy of Form 3 CL-Report to be submitted by the secretary DSIR certifying the expenditure related to Research and development activities during the year. According to the Assessing Officer Form 3CM is only an approval from secretary DSIR for the assessee in house research facility and this approval does not certify that the assessee has actually carried out any research and 3 ITA No.212/PUN/2025 development activities during the period. Only in form 3CL, the secretary, DSIR certifies that actual research and development work has taken place during the year. Since the assessee has confirmed that so far they have not obtained the certificate in Form 3CL, therefore, in the absence of form 3CL from the Secretary DSIR, the Assessing Officer disallowed the claim of deduction of Rs.12,69,17,337/- u/s 35(2AB) of the income Tax Act, 1961 and added back the same to the total income. 5. In appeal the Ld. CIT(A) / NFAC sustained the disallowance of Rs.12,69,17,337/- made by the Assessing Officer by observing as under: 1. Ground no.1 to 3 objects to disallowance of deduction claimed u/s. 35(2AB) for not fulfilling all the conditions prescribed under section 35(2AB). It was noticed from the records available that the assessee has claimed deduction of Rs.126917337/- u/s 35(2AB) for in house research and development work in their in house research facility. The assessee company has claimed total expenses of Rs.84611588 during the year on research and development (Rs.31127790/- as capital expenditure Rs.53483768/- and as revenue expenditure). On verification of submissions made by the assessee in support of claim of deductions were verified and found that the assessee company has submitted form 3CM order of approval of In house Research Development facility from DSIR, Govt. of India. The assessee company has not furnished copy of Form 3 CL-Report to be submitted by the secretary DSIR certifying the expenditure related to Research and development activities during the year. Form 3CM is only an approval from secretary DSIR for the assessee in house research facility, this approval does not certify that the assessee has actually carried out any research and development activities during the period. Only in form 3CL, where the secretary, DSIR is certifying the actual research and development work taken place during the year. Since the assessee has confirmed that so far they have not obtained the certificate in Form 3CL, therefore, in the absence of form 3CL from the Secretary DSIR, the claim of deduction of Rs.126917337/- u/s 35(2AB) of the income Tax Act, 1961 is disallowed and added back to the total income. The disallowance of Rs.126917337/- claimed as deduction u/s 35(2AB) is confirmed.” 4 ITA No.212/PUN/2025 6. The alternate claim of the assessee that the deduction u/s 35(1)(iv) of the Act and u/s 35(1)(i) of the Act should be allowed was also rejected by the Ld. CIT(A) / NFAC by observing as under: “2. Ground 4 & 5 objects to not allowing deduction u/s.35(1)(iv) and 35(1)(i). After giving due consideration to the assessee's submissions as above and the oral submissions made through Video conference on 19.09.2022 the claim of the assessee of deduction of Rs.12,69,17,337/- u/s.35(2AB) of the Act, is disallowed. The assessee has requested to allow Rs.53483768/- u/s.35(1)(i) as revenue expenditure on research and development and Rs.31127790/- u/s 35(1)(iv) as expenditure in nature of capital expenditure is considered and cannot be accepted since, the assessee has not claimed these originally. The assessee has claimed deduction u/s.35(2AB) without obtaining certificate in form 3CL from The secretary, DSIR on 02.11.2021 the secretary DSIR has not issued the certificate in Form 3 CL, till date. It implies that the assessee has not complied with all requirements of the DSIR for obtaining certificate in form 3CL. Hence the request made by the assessee to allow deductions u/s. 35(1)(i) and 35(1)(iv) if not u/s. 35(2AB) is not accepted.” 7. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal. 8. The Ld. Counsel for the assessee at the outset submitted that the assessee has obtained the Form No.3CL issued by the DSIR on 16.12.2022, copy of which is placed at page 164 of the paper book. He submitted that since the disallowance of deduction u/s 35(2AB) of the Act was made on account of non-receipt of Form No.3CL issued by the DSIR, therefore, he has no objection if the matter is restored to the file of the Assessing Officer with a direction to verify the same and allow the necessary deduction in accordance with law. 5 ITA No.212/PUN/2025 9. The Ld. DR also fairly conceded that the Form No.3CL issued by the DSIR on 16.12.2022 was not available either during the course of assessment proceedings or during the course of appellate proceedings, therefore, he has no objection if the matter is restored to the file of the Assessing Officer for adjudication of the issue afresh. 10. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. The only dispute in the instant case is regarding the disallowance of deduction u/s 35(2AB) of the Act on account of non-availability of Form No.3CL issued by the DSIR. It is an admitted fact that Form No.3CL was issued by the DSIR on 16.12.2022 only after the assessee filed a Writ Petition before the Hon’ble Delhi High Court. Since the above certificate was not available either during the course of assessment proceedings or during appellate proceedings and since it has a bearing on the matter, therefore, considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee on this issue along with other alternate grounds are accordingly allowed for statistical purposes. 6 ITA No.212/PUN/2025 11. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 22nd May, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 22nd May, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 21.05.2025 Sr. PS/PS 2 Draft placed before author 21.05.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "