DCIT NON CORPORATE CIRCLE 8(1)-LTU-2, CHENNAI V. M/S. ASHOK LEYLAND LIMITED, CHENNAI

MA 128/CHNY/2025

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The case involves M/s. Ashok Leyland Ltd., which filed a Miscellaneous Application (MA No.68/Chny/2025) against the order of the Income Tax Appellate Tribunal concerning the disallowance of expenditure on scientific research under Section 35(2AB) of the Income Tax Act. The Tribunal had initially denied the weighted deduction due to the absence of Form 3CL from DSIR. However, upon receipt of the form and its submission as part of the appeal, the Tribunal recognized the oversight and corrected the decision, allowing the weighted deduction as per the certified amounts in Form 3CL. The Revenue's application (MA No.128/Chny/2025) sought to contest the Tribunal's allowance of normal deductions for capital expenditure, which was also based on the audit report in Form 3CLA. The Tribunal dismissed the Revenue's application, emphasizing that the matter had been adequately addressed in the original decision and that the Tribunal lacked the power to review its own decisions under Section 254(2) of the Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 780583 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 09-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 08-08-2025
• Other Referred Cases: CIT Vs Reliance Telecom Ltd
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ KUMAR
• Assessee Lawyers: R. VIJAYARAGHAVAN
• Keywords: Set aside; Revenue expenditure; Depreciation; Capital expenditure

Judgement Text

"आयकर अपीलीय अिधकरण, ‘ए’ \u0001यायपीठ, चे ई। IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH: CHENNAI \u0001ी एबी टी. वक , ाियक सद\u0011 एवं एवं एवं एवं \u0001ी जगदीश, लेखा सद क े सम\u0015 BEFORE SHRI ABY T. VARKEY, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER Miscellaneous Application No.68/Chny/2025 (in ITA No.554/Chny/2023) िनधा\u000eरणवष\u000e/Assessment Year: 2018-19 M/s. Ashok Leyland Ltd., No.1, Sardar Patel Road, Guindy, Chennai-600 032. v. The ACIT, Non Corporate Circle-8(1), Large Taxpayer Unit-2, Chennai. [PAN: AAACA 4651 L] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) Miscellaneous Application No.128/Chny/2025 (in ITA No.554/Chny/2023) िनधा\u000eरणवष\u000e/Assessment Year: 2018-19 The ACIT, Non Corporate Circle-8(1), Large Taxpayer Unit-2, Chennai. v. M/s. Ashok Leyland Ltd., No.1, Sardar Patel Road, Guindy, Chennai-600 032. [PAN: AAACA 4651 L] (अपीलाथ\u0016/Appellant) (\u0017\u0018यथ\u0016/Respondent) Assessee by : Mr.R. Vijayaraghavan, Advocate Department by : Mr.Raj Kumar, JCIT सुनवाईक तारीख/Date of Hearing : 29.08.2025 घोषणाक तारीख /Date of Pronouncement : 09.10.2025 Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 2 :: आदेश / O R D E R PER ABY T. VARKEY, JM: These are Miscellaneous Applications preferred both by the assessee and the Revenue in relation to the order dated 14.02.2025 passed by this Tribunal in the assessee’s appeal in ITA No.554/Chny/2023. Both these Miscellaneous Applications relates to the adjudication rendered in the context of disallowance of expenditure incurred on scientific research u/s 35(2AB) of the Act and are therefore being disposed off by this common order. 2. It is observed that, the assessee in Ground Nos. 2 to 6 of the appeal had inter alia objected to the disallowance of deduction for scientific research expenditure to the extent of Rs.243,89,59,212/- which was claimed u/s 35(2AB) of the Act. The facts relating to this issue was that, the lower authorities had denied the weighted component of deduction claimed u/s 35(2AB) of the Act, due to absence of Form 3CL of DSIR. The assessee had alternatively claimed normal deduction for the entire scientific research expenditure incurred at their approved R&D facility u/s 35(1)(i) & 35(1)(iv) of the Act. Though the lower authorities had allowed the alternate plea qua the scientific research expenditure of revenue nature amounting to Rs.387,57,96,408/- but denied the claim for normal deduction in relation to the capital expenditure of Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 3 :: Rs.100,21,22,016/- on scientific expenditure citing lack of evidence. Instead, the lower authorities allowed depreciation at the rate of 15% on the capital expenditure i.e. Rs.30,06,36,605/- [Rs.100,21,22,016 X 15%] and disallowed the balance sum of Rs.70,14,85,411/- [Rs.100,21,22,016 minus Rs.30,06,36,605]. 3. On appeal by the assessee, this Tribunal had in principle upheld the action of the lower authorities denying the weighted component of deduction u/s 35(2AB) of the Act, for want of Form 3CL by DSIR. It was held that, consequent to the amendment brought in Rule 6(7) with effect 01.07.2016, only the expenditure incurred at R&D facility, as approved by DSIR in Form 3CL, is eligible for weighted deduction u/s 35(2AB) of the Act. In so far as the alternate claim for normal deduction of capital expenditure of Rs.100,21,22,016/- incurred on scientific research was concerned, it was held that, the same was allowable in terms of Section 35(1)(iv) of the Act; and since the details of capital expenditure was found to be verifiable from Form 3CLA issued by the auditor, this alternate plea was allowed. Overall therefore, Ground Nos. 2 to 6 raised by the assessee were partly allowed by us. 4. The assessee in their Miscellaneous Application filed in MA No.68/Chny/2025 has brought to our notice that, they had received the Form 3CL from DSIR on 05.04.2023, which they had pointed out in their Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 4 :: grounds of appeal itself and copy of the same was also forming part of the Paper-book, Pages 90 to 91. According to the assessee therefore, a prima facie error had crept into the findings rendered in these grounds wherein it has been mistakenly observed that, the assessee hadn’t filed Form 3CL for AY 2018-19 and as a consequence of which the claim for weighted deduction has been rejected. The assessee has accordingly urged that, this prima facie mistake be rectified and, having regard to the Form 3CL, the AO be directed to quantify and allow the certified weighted component of deduction to the extent of Rs.217,95,93,500/- [Weighted claim of Revenue expenditure of Rs.191,18,12,500/- and Capital Expenditure of Rs.26,77,81,000/-, as per Form 3CL] out of the original claim of Rs.243,89,59,212/-. The Ld. AR has also filed a summary statement quantifying the normal deduction of 100% which was allowed by the Tribunal in their order dated 14.02.2025 and the further deduction of Rs.217,95,93,500/- which is to be allowed, in light of the Form 3CL. Per contra, the Ld. CIT, DR for the Revenue wanted us to remit this issue to the AO for verification. 5. After having heard both the parties and careful examination of the case records, it is noted that, the assessee in their Ground No. 4 of the appeal had indeed pointed out that, they were in receipt of Form 3CL and therefore the amount to the extent certified by DSIR ought to be allowed Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 5 :: as deduction u/s 35(2AB) of the Act. We have also verified the case files and found that the Form 3CL was also placed before us at Pages 90-91 of the Paper Book. In light of the foregoing, there is merit in this miscellaneous application that, our findings rendered at Para 4.5 of the order dated 14.02.2025 in ITA No.554/Chny/2023 suffered from omission to notice the relevant fact, which we over-looked, is a mistake on our part and is required to be suitably rectified. 6. Having said so, but in principle, we stand by our findings that consequent to the amendment brought in Rule 6(7) with effect 01.07.2016, only the expenditure incurred at R&D facility, as approved by DSIR in Form 3CL, is eligible for weighted deduction u/s 35(2AB) of the Act and the balance unapproved expenditure is eligible only for normal deduction u/s 35 of the Act. At the same time, having regard to the fact that, the assessee was later on in receipt of Form 3CL from DSIR, which was also furnished before us at the time of hearing of the quantum appeal(s), the amount to the extent quantified therein is to be allowed as weighted deduction since the conditions set on Section 35(2AB) read with Rule 6(7A)(b) stood satisfied. The working furnished by the assessee is noted to be as under:- Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 6 :: Particulars Revenue Capital a. Actual R&D expenditure: 3,87,57,96,408 1,00,21,22,016 b. Approved by DSIR 3,82,36,25,000 53,55,02,000 c. Balance allowable u/s 35(1) @100% 5,21,71,408 46,65,60,016 d. Weighted deduction on amount approved by DSIR [(b) X 150%] 5,73,54,37,500 80,33,43,000 e. Total deduction allowable u/s.35 (c+d) 5,78,76,08,908 1,26,99,03,016 f. Allowed by this Tribunal in order dated 14.02.2025 [100% of actual expenditure] 3,87,57,96,408 1,00,21,22,016 g. Balance to be allowed as per DSIR approval [Further 50% of expenditure approved] [(b) X 50%] 1,91,18,12,500 26,77,81,000 TOTAL Rs.2,17,95,93,500 7. Having cross-verified the above figures with Form 3CL, the claim of the assessee is found to be verifiable. We accordingly modify our finding rendered in Ground Nos. 3 & 4 and hold that the weighted deduction u/s 35(2AB) was allowable to the extent of amount certified in Form 3CL issued by DSIR for AY 2018-19. Consequently, the aggregate amount allowable u/s 35(2AB) of the Act accordingly stands rectified, as tabulated above. The AO is thus directed to allow the weighted component of deduction u/s 35(2AB) as approved by DSIR in Form 3CL after verifying the figures, as tabulated above. Needless to say, the AO shall pass a speaking order in this regard after allowing the assessee an opportunity of Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 7 :: being heard. Accordingly, the Miscellaneous Application of the assessee is allowed for statistical purposes. 8. We now come to the Revenue’s MA No. 128/Chny/2025. According to the grounds urged in this miscellaneous application, it is noted that, the Revenue is aggrieved by the action of this Tribunal allowing the assessee’s alternate claim for normal deduction of Rs.70,14,85,411/- (Rs.100,21,22,016/- minus Rs.30,06,36,605/-) u/s 35(1)(iv) in respect of capital expenditure incurred on scientific research. It has been urged that the assessee had failed to submit documentary evidences in support of the same and therefore this Tribunal had committed an error in allowing the same. 9. The Ld. AR, at the onset brought it to our notice that, out of the total capital expenditure of Rs.100,21,22,016/-, amount to the extent of Rs.53,55,02,000/- had been approved by DSIR for weighted deduction u/s 35(2AB) of the Act and therefore the quarrel relating to the alternate plea u/s 35(1)(iv) of the Act only remains for the balance unapproved amount of Rs.46,65,60,016/- [Rs. 1,00,21,22,016 minus Rs.53,55,02,000]. Though the Ld. DR did not dispute these revised figures, but on principle he supported the grounds urged in the miscellaneous petition against the allowance of normal deduction for the capital expenditure incurred on scientific research. Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 8 :: 10. Heard both the parties. Firstly, we agree with the Ld. AR that, in view of our findings rendered while adjudicating assessee’s miscellaneous application and in light of Form 3CL issued by the DSIR, there is no quarrel that the assessee is rightfully eligible for weighted deduction u/s 35(2AB) of the Act qua the capital expenditure to the extent of Rs.53,55,02,000/- as certified by DSIR. Hence, the alternate plea only survives for the normal deduction of remaining capital expenditure incurred on scientific research viz., Rs.46,65,60,016/- [Rs. 1,00,21,22,016 minus Rs.53,55,02,000]. 11. Having gone through the case records, it is noted that, the alternate claim of the assessee raised u/s 35(1)(iv) has been allowed by us after discussing the issue in detail in light of the facts available on record at Paras 4.6 to 4.8 of the impugned order. We had taken note of the audit report in Form 3CLA, which inter alia contained the details of both revenue and capital R&D expenditure incurred at the approved in-house R&D facility. It was seen that, the Revenue had accepted the quantification of the revenue expenditure incurred on scientific research as certified by the auditor in their audit report viz., Form 3CLA and also allowed normal deduction for the same u/s 35(1)(i) of the Act. Though, the same audit report Form 3CLA also certified and quantified the details of capital expenditure of Rs.100,21,22,016/- incurred on scientific Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 9 :: research, but the Revenue denied the normal deduction for the same which was claimed u/s 35(1)(iv) of the Act, alleging lack of evidence. We were unable to countenance such selective action of the Revenue, particularly when the AO had allowed depreciation on such expenditure [depreciation at the rate of 15% on the capital expenditure i.e. Rs.30,06,36,605/- (Rs.100,21,22,016 X 15%) and disallowed the balance sum of Rs.70,14,85,411/- (Rs.100,21,22,016 minus Rs.30,06,36,605)]. Moreover, according to us, when the audit report in Form 3CLA hadn’t been rejected by the Revenue; and the auditor had verified and certified the quantum of capital expenditure incurred on scientific research, the alternate claim raised by the assessee u/s 35(1)(iv) of the Act was held by us to be tenable. Hence, in principle, we don’t see any apparent infirmity or error in the finding rendered by us and the same was returned on the basis of the material available on record. 12. It is well understood by now that, a miscellaneous application filed in a disposed matter would be maintainable only for the purpose of correcting any error or omission or mistake and it cannot be used as a means to re-agitate the issue(s) already decided and adjudicated upon by the Tribunal. According to us, if the Revenue is aggrieved by the findings rendered by us in the impugned order allowing the alternate plea for normal deduction of capital expenditure incurred on scientific research, by Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 10 :: relying on the audit certificate issued in Form 3CLA, then the correct recourse may be to approach the Hon’ble High Court, in as much as this Tribunal cannot re-visit their order and go again into the merits of the decision, as it is beyond the scope and ambit of Section 254(2) of the Act and we don’t enjoy the power to review our order. In this regard, we gainfully refer to the following observations made by the Hon’ble Supreme Court in the case of CIT Vs Reliance Telecom Ltd in Civil Appeal Nos. 7110-7111 of 2021, wherein it was held as under:- “6.…As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that. 7. Even the observations that the merits might have been decided erroneously and the ITAT had jurisdiction and within its powers it may pass an order recalling its earlier order which is an erroneous order, cannot be accepted. As observed hereinabove, if the order passed by the ITAT was erroneous on merits, in that case, the remedy available to the Assessee was to prefer an appeal before the High Court, which in fact was filed by the Assessee before the High Court, but later on the Assessee withdrew the same in the instant case.” 13. In view of the above, we see no merit in the grounds raised in this miscellaneous application filed by the Revenue and the same is hereby rejected. Before parting, at the cost of repetition, we may add that, in light of Form 3CL issued by DSIR (as discussed earlier), the quantum of unapproved capital expenditure otherwise allowable by way of normal deduction u/s 35(1)(iv) of the Act stands corrected from Rs.1,00,21,22,016/- to Rs.46,65,60,016/-, as the balance sum of Printed from counselvise.com MA Nos.68 & 128/Chny/2025 (AY 2018-19) M/s. Ashok Leyland Ltd. :: 11 :: Rs.53,55,02,000/- has been certified for by DSIR for weighted deduction u/s 35(2AB) of the Act. In the fitness of matters therefore, we consider it prudent to set aside this issue to the AO for the limited purpose of verifying these numbers and compute the correct figure allowable u/s 35(1)(iv) of the Act, in accordance with law. 14. With the above directions, the Miscellaneous Application of the assessee is disposed off as allowed and the Miscellaneous Application of the Revenue is dismissed. Order pronounced on the 09th day of October, 2025, in Chennai. Sd/- Sd/- (जगदीश) (JAGADISH) लेखा सद /ACCOUNTANT MEMBER (एबी टी. वक ) (ABY T. VARKEY) \u0001याियक सद\bय/JUDICIAL MEMBER चे ई/Chennai, !दनांक/Dated: 09th October, 2025. TLN आदेश क \u0017ितिलिप अ$ेिषत/Copy to: 1. अपीलाथ\u0010/Appellant 2. \u0011\u0012थ\u0010/Respondent 3. आयकरआयु\u0018/CIT, Chennai / Madurai / Salem / Coimbatore. 4. िवभागीय\u0011ितिनिध/DR 5. गाड फाईल/GF Printed from counselvise.com "