M/s Parabolic Drugs Limited, Chandigarh V. CIT, Gurgaon

ITA 1119/CHANDI/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5348 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 16-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Depreciation; Opportunity of being heard; Period of limitation; Difference of opinion; Revised return; Unabsorbed depreciation; Change of opinion; Revenue expenditure; Capital expenditure
• Section: 143(3); 37; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHESB, CHANDIGARH BEFORE SHRI. SANJAY GARG, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 1119/CHD/2014 ASSESSMENT YEAR: 2011-12 M/S. PARABOLIC DRUGS LTD. VS. THE CIT(CENTRAL) SCO 99-100, TOP FLOOR, GURGAON SECTOR- 17B, CHANDIGARH PAN NO. AACCP1419K (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUDHIR SEHGAL RESPONDENT BY : SH. RAVI SARANGAL DATE OF HEARING : 24/10/2017 DATE OF PRONOUNCEMENT : 04/01/2018 ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE I S DIRECTED AGAINST THE ORDER DATED 09/10/2014 PASSED BY THE CI T(CENTRAL), GURGAON. 2. ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. THAT THE WORTHY COMMISSIONER OF INCOME TAX-CENTR AL, GURGAON HAS ERRED IN BEING GIVING DIRECTIONS TO ID. A.O. TO SUITABLY AMEND THE ASSESSMENT [AS FRAMED BY THE ASSESSING OFFICER U/S 153A(1)(B) R.W.S. 143( 3)] BY TREATING THE SAME AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E. 2. THAT THE WORTHY CIT HAS FAILED TO CONSIDER THAT ON VARIOUS OCCASIONS, THE REPLIES HAD BEEN FILED TO HIM BY WAY OF WRITTEN SUB MISSIONS AND DETAILED DISCUSSION HAVE BEEN TAKEN PLACE ON VARIOUS DATES A ND HAS FAILED TO CONSIDER THE SUBMISSIONS MADE BEFORE HIM VIDE LETTERS ON VAR IOUS DATES. 3. THAT THE CIT HAS FAILED TO CONSIDER THAT THE ASS ESSMENT AS FRAMED BY THE ASSESSING OFFICER WAS AFTER DUE APPLICATION OF MIND AND AFTER CONSIDERING THE DETAILED REPLIES ON VARIOUS DATES AS FILED BEFORE H IM DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. WITHOUT PREJUDICE TO GROUND NOS.1 TO 3 ABOVE, TH AT THE LEARNED CIT HAS ERRED IN DIRECTING THE LD. A.O TO VERIFY THE ALLOWA BILITY OF DEDUCTIONS U/S 35(1) OF THE INDIAN INCOME TAX ACT-1961, THE ASSESSING OFFIC ER HAS TAKEN A POSSIBLE AND CORRECT VIEW AS PER THE LAW AND THE CIT COULD NOT H AVE INVOKED THE JURISDICTION TO DIRECT THE LD. AO TO VERIFY AND AMEND ASSESSMENT AL READY FRAMED. 2 5. THAT THE LEARNED CIT HAS ERRED IN CONCLUDING THA T THE ASSESSING OFFICER HAS FAILED TO MAKE NECESSARY INQUIRIES AND FAILED TO AP PLY HIS MIND AS REGARDS THE SET OFF OF UNABSORBED DEPRECIATION AGAINST THE SURRENDE RED INCOME. 6. THAT THE LEARNED CIT HAS ERRED IN DIRECTING THE LD. A.O TO VERIFY THE DISALLOWANCE U/S 40(A)(IA) OF THE INDIAN INCOME TAX ACT-1961. THE ASSESSING OFFICER HAS TAKEN A POSSIBLE AND CORRECT VIEW AS PE R THE LAW AND THE CIT COULD NOT HAVE INVOKED THE JURISDICTION TO DIRECT THE LD. AO TO VERIFY AND AMEND ASSESSMENT ALREADY FRAMED. 7. THAT THE LEARNED CIT HAS ERRED IN DIRECTING THE LD. A.O TO EXAMINE THE CONTENTION OF THE ASSESSEE DENOVO ON TREATMENT OF E LIGIBLE RESEARCH & DEVELOPMENT EXPENDITURE AND TREATING THE SAME AS RE VENUE EXPENDITURE AS PER JUDGMENT OF ITAT IN ASSESSEE'S OWN CASE FOR A Y 200 6-07 THE ASSESSING OFFICER HAS TAKEN A POSSIBLE AND CORRECT VIEW AS PER THE LAW AN D THE CIT COULD NOT HAVE INVOKED THE JURISDICTION TO DIRECT THE LD.AO TO VER IFY AND AMEND ASSESSMENT ALREADY FRAMED. 8. THAT THE LEARNED CIT HAS FAILED TO POINT OUT AS TO HOW THE ASSESSMENT FRAMED BY THE ASSESSING OFFICER IS ERRONEOUS AND PR EJUDICIAL TO THE INTEREST OF THE REVENUE. ON EVERY OCCASION THE LEARNED CIT DIRECTS THE LD. A.O. TO VERIFY THE CLAIMS OF ASSESSEE. WHEREAS THE CLAIMS OF ASSESSEE WERE ALREADY BEEN VERIFIED BY LD. A.O. ONLY AFTER DETAILED ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER HAS TAKEN A POSSIBLE AND CORRECT VIEW AS PER THE LAW AN D THE CIT COULD NOT HAVE INVOKED THE JURISDICTION TO DIRECT THE LD.AO TO VER IFY AND AMEND ASSESSMENT ALREADY FRAMED. 3. GROUND NO. 1 ,2, AND 3 ARE GENERAL IN NATURE AND NEEDS NO ADJUDICATION. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY IS A PRIVATE LIMITED COMPANY AND THE ASSESSMENT ORDER U/S 153A(1)(B) R.W .S 143(3) OF I.T. ACT, 1961 DATED 31/03/2013 FOR A.Y. 2011-12 WAS PASSED BY ASS ISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I, CHANDIGARH (THE ASSES SING OFFICER). THE ORDER PASSED BY ASSESSING OFFICER WAS EXAMINED BY THE LD. PR. CIT. AFTER EXAMINATION THE PR. CIT HAVING VESTED THE POWERS UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 HAS DIRECTED THE ASSESSING OFFICER TO RE-EXAMI NE CERTAIN ISSUES AND AMEND THE ASSESSMENT ACCORDINGLY. 5. AGGRIEVED WITH THE ORDER OF THE LD. PR. CIT THE ASSESSEE FILED APPEAL BEFORE US. 6. THE GROUND NO. 4 & 5 CONTESTED BY THE ASSESSEE R ELATES TO DEDUCTION UNDER SECTION 35(1), AND SET OFF OF UNABSORBED DEPR ECIATION AGAINST SURRENDERED INCOME. (I) DEDUCTION U/S 35(1): THE RETURN OF INCOME FOR THIS ASSESSMENT YEAR WAS FILED ON 28.09.2011WITH THE BUSINESS LOSS OF RS. 6 03,950,380/- IT IS CLAIMED THAT IN THE COMPUTATION OF INCOME THE AMOUNT OF R&D EXPENSES WR ITTEN OFF AMOUNTING TO RS. 92,573,531/- HAS BEEN ADDED TO THE TAXABLE INCOME. THE COPY OF COMPUTATION ATTACHED WITH REPLY DATED 0 6.02.2014 WAS PERUSED AND IT IS SEEN THAT THE FOLLOWING AMOUNTS OF DEDUCT ION HAS BEEN CLAIMED U/S 35(2AB) OF THE INCOME TAX ACT (WORKED OUT @ 200 PERCENT): 3 ITEM AND DETAILS OF CLAIMED DEDUCTION CLAIMED I. CAPITAL EXPENDITURE OF RS. 7835519 AND ITS 200% IS 15,671,038 15671038 II. REVENUE EXPENDITURE OF RS. 640170023 AND ITS 200% 1,280,340,046 IS 1,280,340,046 III. CAPITAL EXPENDITURE OF RS. 16183369 AND ITS 20 0% IS 32,366,738 32,366,738 TOTAL DEDUCTION CLAIMED 1,328,377,822 IT IS FURTHER SUBMITTED THAT THE ASSESSEE FILED A R EVISED RETURN ON 11.03.2014 AND THE COMPUTATION CHART SHOWS THAT AN AMOUNT OF RS. 92,57 3,531/- WAS ADDED BACK TO THE TAXABLE INCOME. THIS FIGURE IS SUM OF TWO FIGURES V IZ. RS. 9,25,73,531/- AND RS. 6,12,350/- WHICH WERE EARLIER CLAIMED FOR BEING EXPENSES AS PE R BOOKS ON R&D. IN THE REVISED RETURN THE CLAIM OF DEDUCTION BEING EXPENSES ON R&D WAS RESTRICTED TO RS. 640170023 BEING THE ACTUAL REVENUE EXPENSE IN THIS REGARD. TH E REASONING OF SUCH CLAIM HAS BEEN EXPLAINED AS PENDING APPROVAL FROM THE DEPARTM ENT OF SCIENTIFIC AND INSTITUTIONAL RESEARCH. 7. THE LD. PR. CIT HAS DIRECTED THE ASSESSING OFFIC ER TO EXAMINE THE CLAIM DENOVO . 8. THE LD. PR. CIT FURTHER HELD THAT THE ISSUE OF SURRENDERED INCOME, REFUND OF PREPAID TAXES AND SET OFF UNABSORBED DEPRECIATION BY THE ASSESSEE ARE TAKEN U P TOGETHER. THE CONTENTION OF THE ASSESSEE COMPANY IS THAT IT FILED ITS ITR FO R THE ASSESSMENT YEAR 2011-12 WITH THE BUSINESS LOSS OF RS. 60.40 (AFTER CONSIDERING T HE DECLARED INCOME OF RS. 14.23 CR) CRORES BY CLAIMING THE WEIGHTED DEDUCTED (I.E. 200%) OF THE EXPENSES INCURRED ON SCIENTIFIC RESEARCH AND DEVELOPMENT. (AMOUNTING RS. 132.84 CRORES.). THEREAFTER, COMPANY REVISED ITS RETURN ON 23 RD MARCH, 2013, SINCE THE APPROVAL FROM DEPARTMENT OF SCIENTIFIC AND INSTITUTIONAL RESEARCH WAS PENDING AT THE TIME OF FILING OF SUCH RETURN THE COMPANY CLAIMED ONLY 100% OF THE REVENUE EXPENDITURE OF RS. 64.02 C RORES INCURRED ON SCIENTIFIC RESEARCH IN ITS REVISED RETURN. THE SAME WAS CLAIME D IN PURVIEW OF ITAT JUDGMENT IN THE ASSESSEE'S CASE IN THE ASSTT. YEAR 2006-07, WHE REIN IT WAS DECIDED THAT THE EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH SHALL B E ALLOWABLE EITHER UNDER SECTION 35 OR 37 OF INCOME TAX ACT, 1961. GROSS TOT AL INCOME IN THE REVISED RETURN AFTER TAKING INTO CONSIDERATION THE DECLARED INCOME OF RS. 14.23 CRORES WAS ARRIVED AT RS. 8.42 CRORES WHICH WAS SET OF AGAINST THE BROUGHT FORWARD UNABSORBED DEPRECIATED OF RS. 8.53 CRORES OF THE AY 2009-10. THEREFORE THE NET TOTAL INCOME AFTER SET-OFF OF DEPRECIATION WAS NIL. THE CONTENTION OF THE ASSESSEE NEED VERIFICATION FR OM THE RECORDS AND ALSO CONSIDERATION OF ALLOW ABILITY IN VIEW OF THE DECIS IONS OF COURTS IN THE CASE OF KIM PHARMA (P) LTD. VS. CIT, ITA NO. 106 OF 2011 (O&M), DATED 27.04.2011, LIBERTY PLYWOOD (P) LTD. VS. ACIT, AMBALA, 727/CHD/2012 AND HON'BLE GUJRAT HIGH COURT IN THE CASE OF FAKIR MOHAMMAD HAJI HASSAN VS. CIT, 247 ITR 290 (GUJ.). THE ASSESSING OFFICER WILL ALSO EXAMINE THE REASONS WHE THER THE DEPRECIATION WAS CLAIMED IN ORIGINAL RETURN AND IF NOT WHETHER THE S AME IS ADMISSIBLE IN REVISED RETURN. 9. BEFORE THE PR. CIT THE ASSESSEE VIDE LETTER DT. 14/03/2014 SUBMITTED AS UNDER: A) COMPANY HAD FILED ITS ORIGINAL RETURN FOR THE AY 2011-12 WITH THE BUSINESS LOSS OF RS 60.40 CRORES BY CLAIMING THE WEIGHTED DEDUCTION OF 200% OF THE EXPENSES INCURRED ON SCIENTIFIC RESEARCH AND DEVELOPMENT. TO TAL WEIGHTED DEDUCTION CLAIMED ON ACCOUNT OF EXPENSES INCURRED ON SCIENTIF IC RESEARCH AND DEVELOPMENT WAS RS 132.84 CRORES ON ACCOUNT OF CAPITAL AND REVENUE EXPENDITURE OF RS 2.40 CRORES AND RS 64.02 CRORES R ESPECTIVELY INCURRED BY THE COMPANY. THE BROUGHT FORWARD UNABSORBED DEPRECIATIO N RORES COULD NOT BE SET OFF DUE TO LOSSES IN THE CURRENT ASSESSMENT YEAR AN D THE SAME WAS CARRIED FORWARD. 4 B) THEREAFTER, COMPANY REVISED ITS RETURN ON 23 RD MARCH 2013. SINCE THE APPROVAL M DEPARTMENT OF SCIENTIFIC AND INSTITUTIONAL RESEAR CH WAS PENDING AT THE TIME OF FILING OF SUCH RETURN THE COMPANY CLAIMED ONLY 100% OF THE REVENUE EXPENDITURE OF RS 64.02 CRORES INCURRED ON SCIENTIFIC RESEARCH IN ITS REVIS ED RETURN. THE SAME WAS CLAIMED IN PURVIEW OF ITAT JUDGMENT IN THE ASSESSEE 'S CASE WHEREIN IT WAS DECIDED THAT THE EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH SHALL BE ALLOWABLE EITHER UNDER SECTION 35 OR 37 OF INCOME TAX ACT 1961. C) GROSS TOTAL INCOME IN THE REVISED RETURN AFTER TAKI NG INTO CONSIDERATION THE DECLARED INCOME OF RS 14.23 CRORES WAS ARRIVED AT R S 8.42 CRORES WHICH WAS SET OFF AGAINST THE BROUGHT FORWARD UNABSORBED DEPRECIATION OF RS 8.53 CRORES OF THE AY 2010-11. THEREFORE THE NET TOTAL INCOME AFTER SET-O FF OF DEPRECIATION WAS NIL. D) THE ASSESSEE COMPANY DINT HAD ANY INTENTION TO EVAD E TAX, RATHER IT WAS AS PER THE PROVISIONS OF LAW THAT THE TAX LIABILITY OF THE ASSESSEE ARRIVED AT NIL. AS IT HAS BEEN MADE MANDATORY FOR ALL THE COMPANY ASSESSEE TO FILE ITS RETURN ELECTRONICALLY, THE BENEFITS OF SET-OFF OF UNABSORB ED DEPRECIATION/LOSS IS AUTOMATICALLY PROVIDED TO THE ASSESSEE AT THE TIME OF FILING OF ITS INCOME TAX RETURN. SUCH SET-OFF OR THE BENEFIT OF EXPENSES ALL OWABLE AS PER THE ACT IS GIVEN TO THE ASSESSEE WHICH IS BEYOND ITS CONTROL. IN THIS C ONTEXT IT IS CLEARLY EVIDENT THAT THE ASSESSEE WAS READY TO PAY ITS TAX LIABILITY AND COM PLY WITH LAW IN ITS FULL SPIRIT, BUT THE BENEFITS DERIVING FROM THE LAW COULD NOT BE AVO IDED. E) SINCE THE COMPANY WAS AWAITING THE APPROVAL FROM DEPARTMENT OF SCIENTIFIC & INSTITUTIONAL RESEARCH FOR THE REVENUE EXPENDITUR E INCURRED BY IT ON RESEARCH AND DEVELOPMENT FOR THE RELEVANT ASSESSMENT YEAR, I T FOLLOWED AN ACCOUNTING PRACTICE OF CAPITALIZING THE REVENUE EXPENDITURE IN ITS BOOKS OF ACCOUNTS RESULTING INTO HIGHER BOOK PROFITS. AT THE TIME OF FILING OF THE RETURN, SINCE THE APPROVAL FROM DEPARTMENT OF SCIENTIFIC & INSTITUTIONAL RESEARCH W AS NOT RECEIVED, THE COMPANY TREATED IT AS A NORMAL BUSINESS REVENUE EXPENDITURE IN LIEU OF THE ITAT JUDGMENT IN ITS CASE WHERE IT WAS DECIDED THAT THE REVENUE EXPE NDITURE INCURRED ON SCIENTIFIC RESEARCH AND DEVELOPMENT WAS ALLOWABLE EITHER U/S 3 5 OR 37 OF INCOME TAX ACT 1961. SINCE THIS REVENUE EXPENDITURE WAS CAPITALIZE D IN THE BOOKS OF ACCOUNTS, THE BOOK PROFITS OF THE COMPANY WAS UNREASONABLY IN FLATED. THEREFORE IN ORDER TO FOLLOW THE SAME PRACTICE BOTH FOR COMPUTATION OF TO TAL INCOME FOR TAX PURPOSES AND BOOK PROFITS AS PER BOOKS OF ACCOUNTS, THE AMOU NT OF SUCH REVENUE EXPENDITURE WAS ADJUSTED FROM THE BOOK PROFITS OF T HE COMPANY AND THE TAX LIABILITY (IF ANY) WHICH AROUSED WAS DULY ACCEPTED. 10. THIS ISSUE HAS TO BE EXAMINED IN CONTEXT OF THE PROVISIONS RELATING TO SECTION 263 WHICH READS AS UNDER: SECTION 263- (1) THE PRINCIPAL COMMISSIONER OR COMMISSIONER MAY CALL FOR AND EXAMINE THE RECORD OF ANY PROCEEDING UNDER THIS ACT, AND IF HE CONSIDERS THAT ANY ORDER PASSED THEREIN BY THE ASSESSING OFFICER IS ERRONEOU S IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE, HE MAY, AFTER GIVING T HE ASSESSEE AN OPPORTUNITY OF BEING HEARD AND AFTER MAKING OR CAUSING TO BE MADE SUCH INQUIRY AS HE DEEMS NECESSARY, PASS SUCH ORDER THEREON AS THE CIRCUMSTA NCES OF THE CASE JUSTIFY, INCLUDING AN ORDER ENHANCING OR MODIFYING THE ASSES SMENT, OR CANCELLING THE ASSESSMENT AND DIRECTING A FRESH ASSESSMENT. EXPLANATION 1FOR THE REMOVAL OF DOUBTS, IT IS HERE BY DECLARED THAT, FOR THE PURPOSES OF THIS SUB-SECTION, (A) AN ORDER PASSED ON OR BEFORE OR AFTER THE 1ST D AY OF JUNE, 1988, BY THE ASSESSING OFFICER SHALL INCLUDE(I) AN ORDER OF ASS ESSMENT MADE BY THE ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR THE INCOME-T AX OFFICER ON THE BASIS OF THE DIRECTIONS ISSUED BY THE JOINT COMMISSIONER UND ER SECTION 144A; 5 (II) AN ORDER MADE BY THE JOINT COMMISSIONER IN EXE RCISE OF THE POWERS OR IN THE PERFORMANCE OF THE FUNCTIONS OF AN ASSESSING OFFICE R CONFERRED ON, OR ASSIGNED TO, HIM UNDER THE ORDERS OR DIRECTIONS ISSUED BY THE BO ARD OR BY THE PRINCIPAL CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR PRINCIPAL DIR ECTOR GENERAL OR DIRECTOR GENERAL OR PRINCIPAL COMMISSIONER OR COMMISSIONER A UTHORISED BY THE BOARD IN THIS BEHALF UNDER SECTION 120; (B) RECORD SHALL INCLUDE AND SHALL BE DEEMED ALWA YS TO HAVE INCLUDED ALL RECORDS RELATING TO ANY PROCEEDING UNDER THIS ACT A VAILABLE AT THE TIME OF EXAMINATION BY THE PRINCIPAL COMMISSIONER OR COMMIS SIONER; (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL F ILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWERS OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND AND SHALL BE DE EMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPEAL. EXPLANATION 2.FOR THE PURPOSES OF THIS SECTION, IT IS HEREBY DECLARED THAT AN ORDER PASSED BY THE ASSESSING OFFICER SHALL BE DEEM ED TO BE ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENU E, IF, IN THE OPINION OF THE PRINCIPAL COMMISSIONER OR COMMISSIONER, (A) THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH SHOULD HAVE BEEN MADE; (B) THE ORDER IS PASSED ALLOWING ANY RELIEF WITHOUT INQUIRING INTO THE CLAIM; (C) THE ORDER HAS NOT BEEN MADE IN ACCORDANCE WITH ANY ORDER, DIRECTION OR INSTRUCTION ISSUED BY THE BOARD UNDER SECTION 119; OR (D) THE ORDER HAS NOT BEEN PASSED IN ACCORDANCE WIT H ANY DECISION WHICH IS PREJUDICIAL TO THE ASSESSEE, RENDERED BY THE JURISD ICTIONAL HIGH COURT OR SUPREME COURT IN THE CASE OF THE ASSESSEE OR ANY OTHER PERS ON. (2) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) AF TER THE EXPIRY OF TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE ORD ER SOUGHT TO BE REVISED WAS PASSED. (3) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTI ON (2), AN ORDER IN REVISION UNDER THIS SECTION MAY BE PASSED AT ANY TIME IN THE CASE OF AN ORDER WHICH HAS BEEN PASSED IN CONSEQUENCE OF, OR TO GIVE EFFECT TO , ANY FINDING OR DIRECTION CONTAINED IN AN ORDER OF THE APPELLATE TRIBUNAL, TH E HIGH COURT OR THE SUPREME COURT. EXPLANATION.IN COMPUTING THE PERIOD OF LIMITATION FOR THE PURPOSES OF SUB- SECTION (2), THE TIME TAKEN IN GIVING AN OPPORTUNIT Y TO THE ASSESSEE TO BE REHEARD UNDER THE PROVISO OF SECTION 129 AND ANY PERIOD DUR ING WHICH ANY PROCEEDING UNDER THIS SECTION IS STAYED BY AN ORDER OR INJUNCT ION OF ANY COURT SHALL BE EXCLUDED. 11. THE ASSESSEE BEFORE US CONTESTED THAT DURING TH E ASSESSMENT PROCEEDINGS THIS MATTER HAS BEEN DULY EXAMINED WHILE THE LD. DR RELIED ON THE ORDER OF THE LD. CIT. 12. WE HAVE GONE THROUGH THE RECORD BEFORE US AND F IND THAT THIS ISSUE HAS BEEN DULY CONSIDERED BY THE ASSESSING OFFICER DURIN G THE ASSESSMENT PROCEEDINGS AND ALSO THIS MATTER OF DEDUCTION UNDE R SECTION 35(1) HAS BEEN 6 EXAMINED BY THE COORDINATE BENCH OF ITAT, CHANDIGAR H FOR THE AY 2011-12(FOR WHICH THE ORDER UNDER SECTION 263 PASSED). WHEREIN THE TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE OF DEDUCTION UNDER SECTION 3 7(1) AND 35(1)(I) OF THE ACT. HENCE WE DIRECT THAT THE ORDER OF THE ASSESSING OFF ICER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THIS GROUND. 13. THE GROUND NO. 6 INVOLVED IN THE ORDER UNDER SE CTION 263 IS DISALLOWANCE UNDER SECTION 40(A)(IA); THE DETAILS ARE AS UNDER: DISALLOWANCE UNDER SECTION 40(A)(IA); IN RESPONSE T O THE NOTICE THE ASSESSEE COMPANY REPLIED THAT ON THE PAYMENT TO BIBBY FINANC IAL SERVICES AND TATA CAPITAL LTD. WERE SUBJECTED TO TDS EVEN THOUGH THE TAX WAS DEDUCTED BUT THE SAME WAS DEPOSITED WITH DELAY. AS PER THE ASSESSMEN T RECORD NO EVIDENCE WAS FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THE CLA IM OF THE ASSESSEE DENOVE AND ARRIVE AT APPROPRIATE CONCLUSION FOR DISALLOWANCE I N VIEW OF THE PROVISIONS CONTAINED IN SECTION. 40 (A) (IA) OF THE ACT. 14. BEFORE US THE LD. AR HAS TAKEN TO THE QUESTIONN AIRE ISSUED DT .29/02/2012 BY THE DCIT WHERE IN QUESTION NO. 11 THE ASSESSEE H AS SPECIFICALLY ASKED PLEASE GIVE THE DETAILS OF EXPENSES ON WHICH PROVISIONS OF TDS ARE APPLICABLE. ALSO EXPLAIN WHETHER TDS HAS BEEN DEDUCTION ON THESE EXP ENSES. THUS THE ISSUE RAISED BY THE LD. CIT STANDS EXAMINE D BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. 15. THE LD. CIT HELD THAT THOUGH THE TAX WAS DEDUC TED BUT THE SAME WAS DEPOSITED WITH DELAY. THIS CANNOT BE A REASON TO RE VISE THE ASSESSMENT ORDER. HENCE WE DIRECT THAT THE ORDER OF THE ASSESSING OFF ICER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE ON THIS GROUND. 16. GROUND NO. 7 RELATES TO THE DIRECTION OF THE LD . CIT TO EXAMINE DENOVO ON THE TREATMENT OF ELIGIBLE RESEARCH AND DEVELOPMENT EXPENDITURE AND TREATING THE SAME AS REVENUE EXPENDITURE. 17. THE ORDER OF THE L.D CIT ON THE ISSUE OF REVENU E EXPENDITURE IS AS UNDER: REVENUE EXPENDITURE CAPITALIZED: THE COMPANY WAS A WAITING THE APPROVAL FROM DEPARTMENT OF SCIENTIFIC & INSTITUTIONAL RESEA RCH FOR THE REVENUE EXPENDITURE INCURRED BY IT ON RESEARCH AND DEVELOPM ENT FOR THE RELEVANT ASSESSMENT YEAR. IN THIS REGARDS THE COMPANY WAS FO LLOWING AN ACCOUNTING PRACTICE OF CAPITALIZING THE REVENUE EXPENDITURE IN ITS BOOKS OF ACCOUNTS BECAUSE THESE WERE ELIGIBLE FOR A WEIGHTED DEDUCTIO N OF 150% ON APPROVAL FROM DEPARTMENT OF SCIENTIFIC & INSTITUTIONAL RESEA RCH. AT THE TIME OF FILING OF THE RETURN SINCE THE APPROVAL FROM DEPARTMENT OF SCIENT IFIC & INSTITUTIONAL RESEARCH WAS NOT RECEIVED, THE COMPANY TREATED IT AS A NORMA L BUSINESS REVENUE 7 EXPENDITURE AS PER THE JUDGMENT OF IT AT IN ITS CASE IN ASSESSMENT YEAR 2006-07 (ITA NO. 2111/DEL/2010 DATED 11/10/2012 COPY ENCL OSED). HONBLE BENCH OF INCOME TAX APPELLATE TRIBUNAL, DELHI HELD THAT THE REVENUE. THIS ISSUE HAS BEARING UPON AND IS INTER-LINKED WIT H THE ISSUE DISCUSSED IN PARA 3-1 OF THIS ORDER, THEREFORE, THE ASSESSING OFFICER IS DIRECTED TO EXAMINE THE CONTENTION OF THE ASSESSEE DENOVE AS HAS ALREADY BE EN DIRECTED ABOVE AND ARRIVE AT FRESH CONCLUSION AFTER DETAILED ENQUIRY. 18. BEFORE US THE LD. AR ARGUED THAT THIS ISSUE HAS ALREADY BEEN EXAMINED BY THE COORDINATE BENCH OF ITAT, DELHI IN ITS OWN CASE IN ASSESSMENT YEAR 2006 -07 (ITA NO. 2111/DEL/2010 DATED 11/10/2012 AND ALLOWED THE EXPENDITURE AND TREATED THIS EXPENDITURE AS REVENUE EXPENDITURE. T HE LD. AR FURTHER ARGUED THAT SINCE THE MATTER STANDS SETTLED BY THE ORDER O F THE ITAT, THE ORDER OF THE LD. CIT DIRECTING THE ASSESSING OFFICER TO EXAMINE THE CONTENTION OF THE ASSESSEE DENOVO CANNOT BE ACCEPTED TO AS THE ORDER OF THE AS SESSING OFFICER IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE RE VENUE ON THIS GROUND. 19. WE HAVE GONE THROUGH THE QUESTIONNAIRE ISSUED B Y THE LD. CIT, THE REPLY FURNISHED BY THE ASSESSEE AND ALSO THE ORDER UNDER SECTION 263 OF THE INCOME TAX ACT, 1961 PASSED BY THE LD. CIT, IN ADDITION TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER AND THE ASSESSMENT ORDER, AND FIND THAT THE ISSUES RAISED BY THE LD. CIT STANDS COVERED EXAMINED BY THE ASSESSIN G OFFICER AND SETTLED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE. 19.1 THE HONBLE JURISDICTIONAL HIGH COURT IN THE C ASE OF HARI TRADING CO. VS. CIT AS REPORTED IN 263 ITR 437 WHEREIN IT HAS BEEN HELD AS UNDER: 'AO HAVING MADE FULL INQUIRIES BEFORE ACCEPTING THE CLAIM OF THE ASSESSEE QUA THE AMOUNT SURRENDERED AT THE TIME OF SURVEY ON ACC OUNT DISCREPANCY IN STOCK AND ACCORDINGLY PASSED THE ORDER WITHOUT MAKING THE ADDITION, THE ORDER OF CIT UNDER S. 263 COULD NOT BE SUSTAINED ON THE GROUND T HAT THE ASSESSMENT WAS MADE WITHOUT PROPER ENQUIRY, MORE SO WHEN THE ASSESSEE'S CASE WAS BEING MONITORED BY THE CIT FROM TIME TO TIME AND THE ASSESSMENT ORD ER HAS BEEN PASSED AFTER A DRAFT ORDER HAD BEEN FORWARDED TO THE THEN CIT FOR HIS APPROVAL.' 19.2 THE FACTS OF THE ABOVE SAID CASE ARE SIMILAR T O THAT OF THE ASSESSEE. IN THE SAID CASE SURRENDER WAS MADE DURING THE COURSE OF S EARCH PROCEEDINGS AND AFTER A THOROUGH INVESTIGATION THE SAME WAS ACCEPTE D BY THE AO. SIMILARLY IN THE CASE OF M/S. GUPTA SPINNING MILLS VS CIT IN ITA NO. 3398/DEL/2010 DATED 29.02.2012 WHEREIN IT WAS HELD AS UNDER: 8 ' THE ID. CIT TOTALLY IGNORED THE AFORESAID REPLY FILED BY THE ASSESSEE BEFORE THE AO. MERE CHANGE OF OPINION OR VIEW WOULD NOT ENABLE THE CIT TO EXERCISE JURISDICTION U/S 263 OF THE ACT MORE SO, WHEN THE A O HAD CONSIDERED THE DETAILS AND THE EXPLANATION OFFERED BY THE ASSESSEE. CHANGE OF OPINION BY REAPPRAISING THE EVIDENCE IS NOT WITHIN THE PARAMETERS OF REVISI ONAL JURISDICTION OF COMMISSIONER UNDER SECTION 263 OF THE ACT. IN VIEW THEREOF, WE SET ASIDE THE IMPUGNED ORDER U/S 263 OF THE ACT AND QUASH THE SAM E.' 19.3 SIMILARLY IN THE CASE OF SMALL WONDER INDUSTRI ES VS CIT IN ITA NO. 2464/MUM/2013 ORDER DATED 24.02.2017, THE HONBLE C OURT HAS OBSERVED AS UNDER: 'THERE IS A DISTINCTION BETWEEN 'LACK OF ENQUIRY' A ND 'INADEQUATE ENQUIRY'. IF THE AO HAS CALLED FOR THE NECESSARY DETAILS AND ASSESSE E HAS FURNISHED THE SAME, THE FACT THAT THE AO IS SILENT IN THE ASSESSMENT ORDER DOES NOT MEAN THAT HE HAS NOT APPLIED HIS MIND SO AS TO JUSTIFY EXERCISE OF REVIS IONAL POWERS BY THE CIT U/S 263' 20. KEEPING IN VIEW THE ABOVE JUDGMENTS AND FACTS O F THE CASE, WE FIND THAT THE ORDER OF THE LD. CIT PASSED UNDER SECTION 263 CANNO T BE UPHELD AS VALID. 21. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 04/01/2018 SD/- SD/- (SANJAY GARG) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER AG DATED : 04/01/2018 COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR