Virchow Biotech Pvt. Ltd., Hyd, Hyderabad V. DCIT, Circle-3(3), Hyderabad, Hyderabad

ITA 1402/HYD/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 6671 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 30-07-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 17-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C RAJESWARA REDDY
• Assessee Lawyers: S RAMA RAO
• Keywords: Competent authority
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO. 1402 /HYD/201 6 ASSESSMENT YEAR: 20 1 2 - 1 3 VIRCHOW BIOTECH PV T. LTD., HYDERABAD. PAN AABCV 2578A VS. DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(3), HYDERABAD. ( APPELLANT ) (RESPONDENT) ASSESSEE BY : S HRI S. RAMA RAO REVENUE BY : SHRI C. RAJESWARA REDDY DATE OF HEARING : 30 /0 7 /201 9 DATE OF PRONOUNCEMENT : 3 0 / 0 7 / 201 9 O R D E R PER S . RIFAUR RAHMAN , A .M. : T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 5 , HYDERABAD, DATED 29/ 0 7 /201 6 FOR AY 20 1 2 - 1 3 . 2 . BRIEF FACTS OF THE CASE ARE, THE ASSESSEE IS A COMPANY IN WHICH THE PUBLIC ARE NOT SUBSTANTIALLY INTERESTED AND IS ENGAGED IN MANUFACTURE AND SALE OF HIGH VALUE OF BIOLOGICAL PRODUCTS. FOR THE ASSESSMENT YEAR 2012 - 13, IT FILED ITS RETURN OF INCOME ON 27.9.2012 ADMITTING AN INCOME OF RS.3,21,61,238/ - AND CLAIMING SET OFF O F THE CARRIED FORWARD LOSS OF THE SAME AMOUNT. THUS , THE TOTAL INCOME IS RETURNED AT RS. NIL. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) ON 03.02.2015. HE DETERMINED THE TOTAL INCOME AT RS.5,77,66,206/ - . THE ASSESSING OFFICER ALLOWED THE BROUGHT FORWARD LOSS OF RS.5,77,66,206/ - AND DETERMINE D THE TOTAL INCOME AT RS. 'NIL'. 2 ITA NO. 1 402 /HYD/1 6 VIRCHOW BIOTECH PVT. LTD., HYD. 2.1 THE ASSESSEE HAD INCURRED AN AMOUNT OF RS. 2,56,04,968/ - TOWARDS R&D EXPENSES AND CLAIMED WEIGHTED DEDUCTION U/S 35(2AB) AT THE RATE OF 200% THAT AMOUNTED TO RS. 5,12,09,936/ - . WHEN THE AO ASKED THE ASSESSEE TO SUBMIT THE NECESSARY APPROVAL FROM THE PRESCRIBED AUTHORITY IN SUPPORT OF THE CLAIM OF THE DEDUCTION, THE ASSESSEE SUBMITTED A COPY OF RENEWAL RECOGNITION OF IN - HOUSE R&D UNIT DATED 27/06/2008 IN WHICH THE RECOGNITION IS ONLY VALID UPTO 31/03/2011 ONLY. THE AO N OTED THAT THE ASSESSEE HAS NOT FURNISHED THE REQUIRED APPROVALS FROM THE SECRETARY, DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH, GOVT. OF INDIA. FURTHER, HE OBSERVED THAT THE MAIN REQUIREMENT FOR CLAIMING DEDUCTION U/S 35(2AB) IS THAT THE ASSESSEE HAS T O FURNISH FORM NO. 3CL ISSUED BY THE SECRETARY DSIR AND THE ASSESSEE HAS NOT FURNISHED THE FORMS 3CK AND 3CM ALSO. SINCE THE ASSESSEE HAS NOT FULFILLED THE CONDITIONS FOR ALLOWING WEIGHTED DEDUCTION, THE AO ALLOWED ONLY ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE AND THE BALANCE OF RS. 2,56,04,968/ - ADDED BACK TO THE INCOME RETURNED BY THE ASSESSEE. 3. WHEN THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), THE CIT(A) DISCUSSED THE ISSUE ELABORATELY REFERRING TO THE PROVISIONS OF SECTION 35(2AB) AS WELL AS CASE LAW AND CONFIRMED THE ORDER OF AO. 4. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN HOLDING THAT THE APPELLANT IS NOT ENTITLED FOR DEDUCTION U / S 35(2AB) OF THE I. T. ACT. 3. THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) OUGHT TO HAVE HELD THAT THE APPELLANT FULFILLED THE CONDITIONS MENTIONED U/ S 35(2AB) OF THE I. T. ACT AND IS ENTITLED FOR DEDUCTION U/ S 35(2AB) OF THE I. T . ACT OF RS.2,56,04,968 / - . 3 ITA NO. 1 402 /HYD/1 6 VIRCHOW BIOTECH PVT. LTD., HYD. 4. THE LEARNED COMMI SSIONER OF INCOME - TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN LEVYING INTEREST U/ S 234B AND 234C OF THE I. T. ACT. 5. BEFORE US, LD. AR OF THE ASSESSEE INVITED OUR ATTENTION TO THE PAGES 35 TO 127 OF THE PAPER BOOK, WHEREIN THE CORRESPONDENCE MADE BY THE ASSESSEE TO DEPT OF SCIENTIFIC AND INDUSTRIAL RESEARCH, MINISTRY OF SCIENCE AND TECHNOLOGY, NEW DELHI, TO DEMONSTRATE THAT THE ASSESSEE IS PURSUING THE MATTER WITH THE MINISTRY FOR APPROVAL IN FORM 3CL. LD. AR SUBMITTED THAT THE SAID CORRESPONDENCE WAS ALREADY AVAILABLE WITH THE REVENUE AUTHORITIES . FURTHER, HE SUBMITTED THAT ASSESSEE IS FOLLOWING WITH THE AUTHORITIES TO GET THE REQUIRED APPROVALS IN FORM 3CL. HE PRAYED THAT THIS ISSUE MAY BE REMITTED BACK TO AO AND AO CAN VERIFY THE SAME AND COMPLETE THE ASSESSMENT ACCORDINGLY. 6. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. ON PERUSAL OF CORRESPONDEN CE MADE BY THE ASSESSEE WITH THE MINISTRY OF SCIENCE AND TECHNOLOGY , WE NOTICE THAT THE ISSUE IS PENDING WITH THE MINISTRY FOR APPROVAL. WE DO AGREE WITH THE AO THAT THE MINISTRY HAS TO APPROVE THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE IN ORDER TO AL LOW THE WEIGHTED DEDUCTION. WE, THEREFORE, REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO RE - DO THE ASSESSMENT DE - NOVO AFTER THE ASSESSEE SUBMITS THE APPROVAL FROM THE COMPETENT AUTHORITY. EVEN THE AO CAN FOLLOW UP WITH THE MINISTRY IN TH IS REGARD. THE ASSESSEE IS DIRECTED TO PURSUE THE MATTER WITH THE MINISTRY FOR APPROVAL DILIGENTLY. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 4 ITA NO. 1 402 /HYD/1 6 VIRCHOW BIOTECH PVT. LTD., HYD. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30 TH JULY , 201 9 . SD/ - SD/ - ( P. MADHAVI DEVI ) (S . RIFAUR RAHMAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 30 TH JULY , 201 9 K V C OPY TO: - 1. VIRCHOW BIOTECH PVT. LTD., C/O SRI S. RAMA RAO, ADVOCATE, FLAT NO. 102, SHRIYA S ELEGANCE, 3 - 6 - 643, STREET NO. 9, HIMAYATNAGAR, HYDERABAD 500 029. 2. DC IT, CIRCLE 1 7(2) , SIGNATURE TOWERS, KONDAPUR, HYDERABAD. 3. CIT(A) 5 , HYDERABAD 4. PR. CIT 5 , HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE