HAWKINS COOKERS LIMITED, MUMBAI V. Asst. Commissioner of Income Tax – 3(1)(2), Mumbai, Mumbai

ITA 1012/MUM/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9859 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 25-07-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 10-05-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital expenditure
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL "H" BENCH, MUMBAI SHRI M. BALAGANESH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 1012/MUM/2022 (ASSESSMENT YEAR: 2017-18) Hawkins Cookers Limited, 101, Maker Tower-F, Cuffee Parade, Mumbai - 400005 [PAN:AAACH1784M] Assistant Commissioner of Income Tax- 3(1)(2), Mumbai, Room No. 607, 6 th Floor, Aayakar Bhavan, Maharishi Karve Road, Mumbai - 400020 .................. Vs ................ Appellant Respondent Appearances For the Appellant/Assessee For the Respondent/Department : : Shri Brahmananda Pani Shri Tejinder Pal Singh Anand Date of conclusion of hearing Date of pronouncement of order : : 26.07.2022 21.10.2022 O R D E R Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Appellant/Assessee has challenged the order, dated 22.03.2022, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as „the CIT(A)‟] for the Assessment Year 2017-18, whereby the Ld. CIT(A) had dismissed the appeal filed by the Appellant against the Assessment Order, dated 16.12.2019 passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as „the Act‟). ITA. No. 1012/Mum/2022 Assessment Year: 2017-18 2 2. The Appellant has raised 5 grounds of appeal all directed against the rejection of claim of weighted deduction under Section 35(2AB) of the Act in respect of capital expenditure of INR 14,33,134/-. 3. The relevant facts, in brief, are that the Appellant filed return of income for the Assessment Year 2017-18 on 31.10.2017 declaring the total income at INR.67,66,80,210/- which was revised return on 03.09.2019 and the total income of INR.67,71,70,990/- was declared by the Appellant. In the return of income, the Appellant had claimed deduction of INR.4,15,62,134/- under Section 35(2AB) of the Act. The case of the Appellant was selected for scrutiny. The Assessing Officer completed the assessment under Section 143(3) of the Act on 16.12.2019, determining total income of the Appellant at INR.67,86,04,130/- by partly denying its claim of deduction made under Section 35(2AB) of the Act. The Assessing Officer allowed deduction for INR.4,01,29,000/- (as against deduction of INR 4,15,62,134/- claimed by the Appellant) and disallowed INR.14,33,134/-. The Assessing Officer held that Appellant was not entitled to claim weighted deduction at the rate of 200% under Section 35(2AB) of the Act in respect of capital expenditure (other than land and building) amounting to INR 14,33,134/- as the same has not been approved by the Department of Scientific and Industrial Research (DSIR). 4. Being aggrieved, the Appellant preferred appeal before CIT(A), however, the same was dismissed. While dismissing the appeal, the CIT(A), vide order dated 22.03.2022, held as under. “6. I have considered the facts of the case, assessment order and appellant's written submissions. .............................In the ITA. No. 1012/Mum/2022 Assessment Year: 2017-18 3 assessment order, the AO specifically pointed out that the prescribed authority, the Secretary, Department of Scientific and Industrial Research (DSIR), New Delhi, vide Part B of Form No.3CL dated 10.07.2018, has given approval for following expenses: A.Y. 2017-18 Capital expenditure (other than land and building) 14.33 Recurring expenditure 386.9 Total R & D expenditure 401.29 The appellant has claimed deduction of Rs. 4,15,62,134/- by claiming 200% of the capital expenditure i.e. Rs. 28,66,268/- As provisions of sec. 35(2AB) and decision of the Hon'ble Karnataka High Court in the case of Tejas Network Ltd. (supra), specifically held that the deduction u/s. 35(2AB) may be allowed to the extent approved by the DSIR. In the instant case, the AO has already allowed deduction u/s. 35(2AB) to the extent approved by the DSIR........ In view of the above, it is held that the AO is perfectly justified in disallowing Rs. 14,33,134/- being amount claimed over and above the amount approved by the DSIR. The addition made at Rs. 14,33,134/- is hereby sustained. The sole ground raised by the appellant regarding this issue is dismissed.” 5. The Appellant is now before us in appeal against the order passed by the CIT(A). We have heard the rival contention and perused the material on record. 6. We note that the Assessing Officer has made disallowance of INR 14,33,134/- on the ground that the said amount has not been approved by DSIR. While doing so in paragraph 4.3, the Assessing Officer has relied upon the proviso to Section 35(2AB)(1) of the Act which was applicable to the assessment years beginning on or after 1 st day of April 2021. Whereas the appeal before us pertains to Assessment Year 2017-18. The provisions of Section 35(2AB)(1) of the Act as applicable to the assessment year before us are as under: ITA. No. 1012/Mum/2022 Assessment Year: 2017-18 4 "Where a company engaged in the business of bio-technology or in any business of manufacture or production of any article or thing, not being an article or thing specified in the list of the Eleventh Schedule incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to two times of the expenditure so incurred." 7. On perusal of above, it is clear that an assessee is allowed to claim deduction of a sum equal to two times the expenditure incurred on scientific research (not being expenditure in the nature of cost of any land or building). It is admitted position that DSIR had approved capital expenditure of INR 14,33,000/-. Therefore, the Appellant was, in our view, entitled to claim deduction of INR 28,66,000/- being two times the amount of capital expenditure of INR 14,33,000/- approved by DSIR and incurred by the Appellant during the relevant previous year. Accordingly, addition of INR 14,33,000/- made by the Assessing Officer and confirmed by CIT(A) is deleted. In result, the present appeal is allowed. Order pronounced on 21.10.2022. Sd/- Sd/- (M. Balaganesh) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंक Dated : 21.10.2022 Alindra, PS ITA. No. 1012/Mum/2022 Assessment Year: 2017-18 5 आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- 4. आयकर आय क्त / CIT 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपि प्रदि //True Copy// उप/सह यक पुंजीक र /(Dy./Asstt. Registrar) आयकर अपीलीय अदिकरण, म ुंबई / ITAT, Mumbai