Stedman Pharmaceuticals Private Limited, CHENNAI V. ACIT, Bangalore

ITA 152/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7869 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 26-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 20-01-2015
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: P KUMAR
• Keywords: Opportunity of being heard; Deemed to accrue or arise in india; Competent authority
• Section: 143(3); 115JB

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I.T.A.NO S . 1 52 AND 153/MDS/2015 ASSESSMENT YEAR S :200 9 - 1 0 & 2011 - 12 STEDMAN PHARMACEUTICALS PRIVATE LIMITED, 3A, ADYAR BRIDGE ROAD, ADYAR, CHENNAI 600 0 20 . [PAN: A A ACS9891G ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX , CPC, BENGALUR U. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI P. KUMAR, C.A. / RESPONDENT BY : SHRI A. V. SREEKANTH , J CIT / DATE OF HEARING : 2 6 . 1 1 .201 5 / DATE OF P RONOUNCEMENT : 24 . 0 2 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : BOTH T H E APPEAL S FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDER S OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) V I , CHENNAI , BOTH DATED 2 8 . 1 0. 20 1 4 RELEVANT TO THE ASSESSMENT YEAR S 200 9 - 1 0 AND 2011 - 12. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009 - 10 IS WITH REGARD TO CONFIRMATION OF ADDITION MADE TOWARDS BOOK PROFITS AT .17,73,408/ - COMPUTED UNDER SECT ION 115JB OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] . I.T.A. NO S . 152 & 153 /M/ 15 2 I.T.A. NO. 152/MDS/2015 [A.Y. 2009 - 10] 2. BRIEF FACTS OF TH E CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 25.09.2009 FOR THE ASSESSMENT YEAR 2009 - 10 DECLARING NIL INCOME AND OFFERED .17,73,408/ - AS BOOK PROFIT CHARGEABLE TO TAX UNDER SECTION 115JB OF THE ACT. THE RETURN OF THE ASSESSEE WAS PROCESSED BY THE CENTRALIZED PROCESSING CENTRE, BANGALORE UNDER SECTION 143(1) OF THE ACT. THE ASSESSING OFFICER HAS COMPLETED THE ASSESSMENT UNDE R SECTION 143(1) OF THE ACT BY DETERMINING THE DEEMED INCOME FROM BOOKS UNDER SECTION 115JB OF THE ACT AT .26,94,762/ - AS AGAINST .17,73,408/ - ADMITTED BY THE ASSESSEE. 3. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDER ING VARIOUS DETAILS AND SUBMISSIONS, THE LD. CIT(A) PARTLY ALLOWED THE GROUND RAISED BY THE ASSESSEE BY REDUCING THE CORRECT AMOUNT OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT FROM .26,94,762/ - TO .21,41,110/ - . 4. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AND BY FILING VARIOUS DOCUMENTS, IN THE FORM OF PAPER BOOK, AS FILED BEFORE THE AUTHORITIES BELOW AND PLEADED THAT THE BOOK PROFITS SHOULD BE ACCEPTED AT .17,73,408/ - AS COMPUTED BY THE ASSESSEE UNDER SECTION 115JB OF THE ACT. FURTHER THE LD. COUNSEL FOR THE ASSESSEE STRONGLY ARGUED THAT FBT IS AN ALLOWABLE DEDUCTION IN THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT AS PER CBDT CIRCULAR 8 OF 2005 DATED 29.08.2005, BUT THE LD. CIT(A), I.T.A. NO S . 152 & 153 /M/ 15 3 WHILE REVISING THE COMPUTATION OF BOOK PROFIT, HE HAS WRONGLY INCLUDED THE PROVISION OF FBT OF .3,40,702/ - . HE ALSO RELIED ON THE DECISION IN THE CASE OF CIT V. BHUSHAN STEEL LTD. IN ITA 324/2012 (DELHI) AND THE DECISION OF THE ITAT, DELHI IN THE CASE OF ITO V. VINTAGE DISTILLERS LTD. 130 TTJ DEL 79 . 5. ON THE OTHER HAND, THE LD. DR STRONGLY SUP PORTED THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS COMPUTED BOOK PROFITS UNDER SECTION 115JB OF THE ACT AT .17,73,408/ - . HOWEVER, TH E ASSESSING OFFICER WORKED OUT THE BOOK PROFIT AT .26,94,762/ - . ON PERUSAL OF THE PROFIT AND LOSS ACCOUNT AND COMPUTATION MADE BY THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE HAS NOT INCLUDED THE PROVISION FOR FRINGE BENEFIT TAX OF .3,40,7 02/ - UNDER EXPLANATION [I] TO THE SECTION 115JB OF THE ACT IN THE COMPUTATION OF INCOME. THE NET PROFIT DECLARED BY THE ASSESSEE IS REQUIRED TO BE INCREASED BY THE CLAIM FOR PROVISION OF FBT FOR THE PURPOSE OF COMPUTATION OF BOOK PROFIT UNDER EXPLANATION [ I] TO SECTION 115JB OF THE ACT. THE PROVISION FOR FBT IS COVERED UNDER CLAUSE (A) OF EXPLANATION [I] TO SECTION 115JB, BEING THE AMOUNT OF INCOME TAX PAID OR PAYABLE AND PROVISION THEREFOR. THE PROVISION FOR FRINGE BENEFIT TAX IS THE PROVISION FOR INCOME T AX UNDER CHAPTER XII - H OF THE INCOME TAX ACT. THEREFORE, SINCE THE ASSESSEE HAS NOT INCLUDED THE PROVISION FOR FBT IN THE I.T.A. NO S . 152 & 153 /M/ 15 4 NET PROFIT FOR THE PURPOSE OF COMPUTATION OF INCOME UNDER SECTION 115JB OF THE ACT , THE ASSESSING OFFICER HAS RE JECTED THE CLAIM OF TH E ASSESSEE. THE LD. CIT(A) FURTHER NOTICED THAT THE ASSESSING OFFICER HAS COMMITTED AN ERROR WHILE COMPUTING THE INCOME UNDER SECTION 115JB OF THE ACT BY TAKING THE PROFIT BEFORE TAX OF .21,14,110/ - AND FURTHER MAKING ADDITION FOR THE PROVISION OF CURRENT TAX OF .1,82,661/ - AND PROVISION FOR DEFERRED TAX OF .3,97,991/ - . ACCORDINGLY, THE LD. CIT(A) WORKED OUT THE DEEMED INCOME UNDER SECTION 115JB OF THE ACT AS UNDER: NET PROFIT FOR THE YEAR 11,92,756 ADD: PROVISION FOR THE CURRENT TAX PROVISION FOR DEFERRED TAX PROVISION FOR FBT 1,82,661 3,97,991 3,40,702 BOOK PROFIT 21,14,110 7. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT FBT IS AN ALLOWABLE DEDUCTION IN THE COMPUTATION OF BOOK PROFIT UNDER SECTION 115JB OF THE ACT AS PER CBDT CIRCU LAR 8 OF 2005 DATED 29.08.2005 AND PERUSED THE SAME. IN THE CASE OF ITO V. VINTAGE DISTILLERS LTD. (2010) 130 TTJ (DEL) 79, THE DELHI BENCHES OF ITAT HAS HELD AS UN DER: IN THE LIGHT OF ABOVE DISCUSSION REGARDING STATUTORY PROVISION ON THIS ISSUE, NOW WE EXAMINE THE CONTENTIONS RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE OF THE REVENUE THAT WHEN THE LANGUAGE OF THE SECTION IS CLEAR, NO REFERENCE IS REQUIRED TO EXPLANATORY NOTE OR BOARD'S CIRCULAR. WE ARE OF THE CONSIDERED OPINION THAT THIS CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE OF THE REVENUE DOES NOT HAVE ANY RELEVANCE IN THE PRESENT CASE BECAUSE WE HAVE SEEN THAT IN THE PRESENT CASE, THE PROVISI ONS OF EXPLN. 1 TO S. 115JB ARE CLEAR AND AS PER THESE PROVISIONS, PAYMENT OR PROVISION FOR 'FBT' IS NOT REQUIRED TO BE ADDED BACK FOR THE PURPOSE OF COMPUTING BOOK PROFIT UNDER S. 115JB OF THE ACT BECAUSE WE HAVE SEEN THAT THE TERM USED IN THIS CLAUSE OF EXPLANATION IS 'INCOME - TAX', WHICH DOES NOT INCLUDE 'FBT' AND IN SPITE OF THIS FACT THAT THERE IS A TERM 'TAX' ALREADY ON THE STATUTE BOOK, I.T.A. NO S . 152 & 153 /M/ 15 5 WHICH INCLUDES 'FBT' ALSO, THE LEGISLATURE HAS NOT USED THAT TERM AND HAS USED THE TERM 'INCOME - TAX' IN EXPLANATION TO S. 115JB. HENCE, FOR THIS DECISION, HELP OF ANY BOARD'S CIRCULAR OR EXPLANATORY NOTE IS NOT REQUIRED AND THEREFORE, THIS CONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE OF THE REVENUE HAS NO RELEVANCE IN THE PRESENT CASE BECAUSE IN THE PRESENT CAS E, THE ASSESSEE DESERVES TO SUCCEED ON THE BASIS OF THE PROVISIONS OF S. 115JB OF THE ACT WITHOUT ANY HELP FROM THE BOARD'S CIRCULAR OR EXPLANATORY NOTE. WE, THEREFORE, DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND DECLINE TO INTERFERE IN THE ORDER OF TH E LEARNED CIT(A) ON THIS ISSUE. 8. BY AGREEING WITH THE ABOVE FINDINGS OF THE DELHI BENCHES OF ITAT, THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT V. BHUSHAN STEEL LTD. IN ITA NO. 324/2012 ORDER DATED 24.08.2012 HAS HELD AS UNDER: 8. THIS COURT AGRE ES WITH THE REASONING EMPLOYED AND THE CONCLUSION REACHED IN VINTAGE DISTILLERS' CASE (SUPRA). SECTION 2(43) DEFINES TAX AS INCOME TAX CHARGEABLE UNDER THE ACT, AS WELL AS FBT PAYABLE UNDER SECTION 115WA . EVEN THOUGH THIS DEFINITION OF 'TAX' WAS AMENDED AFTER THE INTRODUCTION OF THE CHAPTER ON FBT, NO CORRESPONDING AMENDMENT WAS MADE IN RESPECT OF EXPLANATION 1(A) OF SECTION 115JB . IT IS THUS CLEAR THAT FOR THE PURPOSES OF EXPLANATION 1(A) TO SECTION 115JB , 'INCOME TAX' DOES NOT INCLUDE FBT. FBT, THEREFORE, NEED NOT BE ADDED BACK TO NET PROFIT FOR COMPUT ING BOOK PROFIT. CRUCIALLY SECTION 115 WA ENACTS THAT FBT IS A TAX 'IN ADDITION' TO INCOME TAX. 9. IN VINTAGE DISTILLERS'S CASE (SUPRA), THE AO HAD, TO COMPUTE BOOK PROFIT FOR THE PURPOSES OF SECTION 115 JB , ADDED AN AMOUNT (PROVISION FOR TAXES) WHICH INCLUDED THE PROVISION FOR FBT. THE ASSESSEE CLAIMED THIS AS A DEDUCTION ON THE GROUND THAT FBT WAS NOT INCLUDED IN 'INCOME TAX' FOR THE PURPOSES OF EXPLANATION 1(A) TO SECTION 115JB . LEARNED CIT(A), AND THE TRIBUNAL, BOTH HAD ACCEPTED THE ASSESSEE'S CONTENTION, AND ALLOWED THE DEDUCTION OF THE AMOUNT FOR PROVISION OF FBT (OR DELETED THE ADDITION OF THE AMOUNT TO NET PROFIT). 10. THE QUESTION IS ACCORDINGL Y ANSWERED IN FAVOUR OF THE ASSESSEE ON THE GROUND THAT THE AO HAD WRONGLY ADDED BACK FBT TO NET PROFIT, WHEN THE SAME IS AN ALLOWABLE DEDUCTION AS FBT DOES NOT FALL UNDER THE EXPRESSION 'INCOME TAX', UNDER EXPLANATION 1 TO SECTION 115JB (2). CONSEQUENTLY THE REVENUE'S CONTENTIONS FAIL AND ITS APPEAL IS DISMISSED. 9. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF ITO V. VINTAGE DISTILLERS LTD. (SUPRA) AS WELL AS THE DECISION OF THE H ON BLE DELHI I.T.A. NO S . 152 & 153 /M/ 15 6 HIGH COURT IN THE CASE OF CIT V. BHUSHAN STEEL LTD. (SUPRA), WE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO EXCLUDE THE FRINGE BENEFIT TAX OF .3,40,702/ - FOR ARRIVING THE NET PROFIT FOR THE PURPOSE OF COMPUTATION OF INCOME UNDER SECTION 115JB OF THE ACT. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. I.T.A. NO. 153/MDS/2015 : [A.Y. 2011 - 12] 10. THE ASSESSEE FILED THE RETURN OF INCOME DECL ARING TOTAL INCOME OF .64,52,570/ - . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER ISSUE OF NOTICES UNDER SECTION 143(2)/142(1) OF THE ACT, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT BY MAKING ADDITION OF .87,97,204/ - . 1 1. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS OBSERVED THAT T HE ASSESSEE HAS NOT FILED FORM 3CL FROM THE DSIR FOR CLAIMING DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. THEREFORE, BY FOLLOWING THE DECISION OF MUMBAI BENCHES OF ITAT IN THE CASE OF US V LTD. V. DCIT , THE ASSESSING OFFICER DISALLOWED THE CLAIM OF DEDUCTION MADE BY THE ASSESSEE. 12. ON APPEAL, THE AR OF THE ASSESSEE, THOUGH CONCEDED THAT THE ASSESSEE DID NOT GET APPROVAL FROM DSIR AS PRESCRIBED UNDER THE INCOME TAX ACT, HE HAS SUBMITTE D THAT THE ASSESSEE HAS GOT RECOGNITION OF R&D UNIT FROM THE DSIR VIDE ITS LETTER DATED 29.03.2011. MERE RECOGNITION OF UNIT OF R&D PURPOSE IS NOT SUFFICIENT FOR ALLOWING DEDUCTION. ACCORDINGLY, THE LD. I.T.A. NO S . 152 & 153 /M/ 15 7 CIT(A) HAS HELD THAT THE ASSESSING OFFICER WAS LEGALL Y CORRECT IN MAKING DISALLOWANCE OF .87,97,204/ - . 13. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 14. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE HAS INCURRED AN EXPENDITURE OF .43,98,602/ - FOR R&D PURPOSES AND CLAIMED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT BY FILING LEDGER ACCOUNTS, ETC. BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE HAS NOT FILED FORM 3CL FROM DSIR TO C LAIM DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. MERE RECOGNITION OF UNIT OF R&D PURPOSE IS NOT SUFFICIENT FOR ALLOWING DEDUCTION AND IN THE ABSENCE OF APPROVAL FROM THE PRESCRIBED AUTHORITY, THE LD. CIT(A) CONFIRMED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 15. IN ORDER TO ENCOURAGE R&D INITIATIVES BY INDUSTRY, AND TO MAKE R&D AN ATTRACTIVE PROPOSITION, THE FINANCE BILL 1997 INTRODUCED A SUB - SECTION (2AB) IN SECTION 35 OF THE IT ACT 1961. THIS SUB - SECTION PROVIDES FOR WEIGHTED TAX DEDUCTION OF A S UM EQUAL TO TWO TIMES OF ANY EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH (NOT BEING EXPENDITURE IN THE NATURE OF COST OF ANY LAND OR BUILDING) IN CERTAIN AREAS SPECIFIED BY SECTION 35(2AB) OF IT ACT, BY COMPANIES ON IN - HOUSE R&D CENTRES, APPROVED BY THE 'P RESCRIBED AUTHORITY'. TO CLAIM DEDUCTION UNDER SECTION 35(2AB) OF THE ACT, THE I.T.A. NO S . 152 & 153 /M/ 15 8 COMPANY HAVING IN - HOUSE R&D, DULY RECOGNIZED BY THE DSIR, SHOULD SUBMIT THE REPORTS IN PRESCRIBED FORMAT TO THE SECRETARY, DSIR, WHO IS DESIGNATED AS PRESCRIBED AUTHORITY . AFT ER ASSESSMENT OF THE IN - HOUSE R&D ACTIVITIES CARRIED OUT BY THE COMPANIES, THE SECRETARY, DSIR GIVES A CERTIFICATE IN FORM 3CL STATING THE ALLOWABILITY OF EXPENDITURE OF CAPITAL AND REVENUE NATURE FOR THE FINANCIAL YEARS UNDER CONSIDERATION TO THE DIRECTOR GENERAL OF INCOME TAX [EXEMPTION] FOR CLAIMING DEDUCTION UNDER SECTION 35(2AB) OF THE ACT BY THE COMPANY. ONCE THE CERTIFICATE IN FORM 3CL ISSUED BY THE SECRETARY, DSIR TO DGIT [E] IS NOT AVAILABLE WITH THE ASSESSEE /COMPANY SHOWS THAT THE PRESCRIBED AUTHOR ITY HAS NOT SATISFIED WITH THE IN - HOUSE R&D ACTIVITY CARRIED OUT BY THE COMPANY FOR CLAIMING THE ALLOWABLE EXPENDITURE OF CAPITAL AND REVENUE NATURE UNDER SECTION 35(2AB) OF THE ACT . IN THE INSTANT CASE, THE ASSESSEE HAS FILED ONLY RECOGNITION FROM DSIR AN D NOT APPROVAL UNDER FORM 3CL FROM THE PRESCRIBED AUTHORITY TO THE DGIT[E] FOR ALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AND CONFIRMED BY THE LD. CIT(A). 16. BEFORE US, T HE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE DECISION IN THE CASE OF ACIT V. MECO INSTRUMENTS P. LTD. IN I.T.A.NO. 4246/MUM/2009 DATED 20.08.2010 . IN THE ABOVE CASE , THE ASSESSING OFFICER DENIED THE DEDUCTION UNDER SECTION 35(2AB) OF THE A CT FOR THE FOLLOWING REASONS: I) THE ASSESSEE HAD NOT MADE APPLICATION TO THE PRESCRIBED AUTHORITY I.E. SECRETARY, DSIR IN THE PRESCRIBED FORM 3CK. I.T.A. NO S . 152 & 153 /M/ 15 9 II) THE ASSESSEE HAD ACCEPTED THAT IT HAD NOT OBTAINED ORDER FROM THE PRESCRIBED AUTHORITY IN FORM 3CM. III) THE ASSESSEE HAD NOT OBTAINED REPORT SUBMITTED BY THE PRESCRIBED AUTHORITY TO DG(EXEMPTION) IN FORM NO. 3CL. IV) THE ASSESSEE COMPANY HAD ALSO ACCEPTED THAT IT HAD NOT SENT ANY AUDIT REPORT TO THE PRESCRIBED AUTHORITY BEFORE THE DATE PRESCRIBED U /S.35(2AB) R.W. RULE 6. V) IN THE TERMS AND CONDITIONS OF RECOGNITION OF IN - HOUSE R&D UNIT, WHICH WERE ATTACHED WITH THE RENEWAL OF RECOGNITION AS WELL AS WITH THE ORIGINAL APPROVAL GIVEN BY THE ASSESSEE FOR ITS R&D UNIT IT IS DEARLY WRITTEN ON SR.NO.9 THAT THIS RECOGNITION OF IN - HOUSE R&D UNIT IS NOT MEANT FOR TAX EXEMPTION AND QUANTUM OF TAX EXEMPTION, DEVELOPMENT REBATE WILL BE GOVERNED BY THE TAX LAW IN OPERATION FROM TIME TO TIME. VI) LEGISLATURE HAS NOWHERE GIVEN ANY EXEMPTION TO THE R&D UNITS, WHICH WERE ALREADY APPROVED AS IN - HOUSE R&D BY SCIENTIST OF DSIR BECAUSE THE INTRODUCTION OF SECTION 35(2AB) WAS MADE BY THE FINANCE ACT, 1997 W.E.F.1.4.198 AND SPECIFIC PROCEDURE HAS BEEN PRESCRIBED THEREIN REGARDING APPROVAL BY THE PRESCRIBED AUTHORITY. VII) NO AUDIT HAS BEEN DONE BY THE PRESCRIBED AUTHORITY BEFORE 31ST OCTOBER, OF SUCCEEDING YEAR. THE CIT(A) ALLOWED THE ASSESSEE S APPEAL TAKING NOTE OF THE FACT THAT THE ASSESSEE HAD FILED F ORM 3CK BEFORE DSIR ON 28.4.2008, WHICH , THOUGH FILED MUCH AFTER THE CLOSE OF THE PREVIOUS YEAR UNDER CONSIDERATION BUT NO TIME LIMIT HAS BEEN PRESCRIBE D UNDER LAW FOR FILING THIS APPLICATION. HE ALSO TOOK NOTE OF THE CONTENTS OF THE NOTE SHE ET OF DSIR OBTAINED BY THE ASSESSEE UNDER RIGHT TO INFORMATION ACT. HE NO TED FROM THE SAME THAT THE APPLICATION FOR THE YEAR UNDER CONSIDERATION HAD BEEN PROCESSED BY THE LOWER AUTHORITIES BUT REMAINED UNATTENDED BY THE CONCERNED OFFICER OF DSIR INAS MUCH AS NEITHER THE SAME HAD BEEN REJECTED NOR APPROVED THOUGH FOR SUBSEQUENT Y EAR APPROVAL HAS BEEN GRANTED AFTER EXPANSION OF FACTORY SITE. I.T.A. NO S . 152 & 153 /M/ 15 10 HE FURTHER NOTED THAT AS PER RULE 6(LB) FOR THE PURPOSES OF SUB - SECTION (2AB) OF SECTION 35, THE PRESCRIBED AUTHORI TY IS SECRETARY, D SIR AND AS PER R ULE 5 A, THE PRESCRIBED AUTHORITY IF SATISFI ED THAT THE CONDITIONS PROVIDED IN THIS RULE AND IN SU B - SECTION (2AB) OF S ECTION 35 OF THE ACT ARE FULFILLED, PASS ORDER IN WRITING IN FORM 3C M PROVIDED THAT REASONABLE OPPORTUNITY OF BEING HEARD WAS TO BE GRANTED BEFORE REJECTI NG THE APPLICATION. HE NOTED THAT NO OPPORTUNITY HAS BEEN AFFORDED TO THE ASSESSE E COMPANY TILL DATE. THEREFORE, THE ASSESSEE WAS DEPRIVED OF BENEFIT OF SECTION 35(2 AB) FOR NO FAULT OF IT. HE RELIED ON VARIOUS AUTHORITIES, WHIC H DEALS WITH THE MANNER IN WHICH A STATUTORY AUTHORITY BE STOWED WITH POWERS HAS TO CONDUCT ITSELF. HE OBSERVED TH AT SINCE NO ORDER OF REJECTION HAS BEEN PASSED BY THE COMPETENT AUTHORITY IN ACCO RDANCE WITH THE PRESCRIBED RULES, A CONTRARY VIEW HAS TO BE TAKEN THAT THE ASSESSEE'S APPLICATION H AS BEEN ACCEPTED. UNDER THE ABOVE FACTS AND CIRCUMSTANCES AND ALSO BY FOLLOWING THE DECISION OF AHMEDABAD BENCH, THE MUMBAI BENCHES OF THE TRIBUNAL CONFIRMED THE ORDER OF THE LD. CIT(A) AND DISMISSED THE APPEAL OF THE REVENUE . 17. HOWEVER, IN THE INSTANT CASE, THE ASSES SEE COULD NOT FILE ANY DETAILS WITH REGARD TO FILING OF APPLICATION BEFORE THE PRESCRIBED AUTHORITY I.E. SECRETARY, DSIR OR FILED THE APPROVAL OF THE PRESCRIBED AUTHORITY TO DGIT [E] IN FORM 3CL , EITHER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A) OR EVEN BEFORE THE TRIBUNAL FOR ADMITTING THE CLAIM OF DEDUCTION UNDER SECTION I.T.A. NO S . 152 & 153 /M/ 15 11 35(2AB) OF THE ACT. THEREFORE, THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IN THE CASE OF ACIT V. MECO INSTRUMENTS P. LTD. HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE. 1 8 . IN THE CASE OF AARTI INDUSTRIES LTD. V. ADDL.CIT IN I.T.A. NO. 8387/MUM/2004 & OTHERS DATED 30.03.2012 , WHEREIN, IN THAT CASE, THE LD. CIT(A), RESTRICTED THE CLAIM OF DEDUCTION UNDER SECTION 35(2AB) OF THE ACT AT 15%, AND WHETHER THE L D. CIT(A) IS EMPOWERED TO ALLOW DEDUCTION AT 15% IN SPITE OF THE FACT THAT THE CONDITIONS LAID DOWN IN THE SAID SECTION WAS NOT FULFILLED OR SATISFIED IS A DEBATABLE ISSUE. HENCE, THE CASE LAW RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE HAS NO APPLICATIO N TO THE FACTS OF THE PRESENT CASE. 18. FURTHER, IN THE CASE OF CIT V. SANDAN VIKAS (INDIA) LTD. [2011] 335 ITR 117 (DELHI), THE POINT AT ISSUE BEFORE THE HON BLE DELHI HIGH COURT WAS THAT THE ASSESSING OFFICER REFUSED TO ACCORD THE BENEFIT OF THE PROVI SIONS OF WEIGHTED DEDUCTION TO THE ASSESSEE ON THE GROUND THAT RECOGNITION AND APPROVAL WAS GIVEN BY THE DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH IN FEBRUARY/SEPTEMBER, 2006 I.E., IN THE NEXT ASSESSMENT YEAR, AGAINST WHICH, THE HON BLE COURT, BY FO LLOWING THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. CLARIS LIFESCIENCES LTD. [2010] 326 ITR 251, HELD THAT IT IS NOWHERE SUGGESTED THAT DATE OF APPROVAL ONLY WILL BE CUT - OFF DATE FOR ELIGIBILITY OF WEIGHTED DEDUCTION ON THE EXPENS ES INCURRED FROM THAT I.T.A. NO S . 152 & 153 /M/ 15 12 DATE ONWARDS AND DISMISSED THE APPEAL FILED BY THE REVENUE . THUS, THE ABOVE CASE LAW HAS NO APPLICATION TO THE FACTS OF THE PRESENT CASE, WHERE APPROVAL OF THE PRESCRIBED AUTHORITY I.E. SECRETARY, DSIR TO DGIT [E] IN FORM 3CL WAS NOT F ILED BEFORE THE ASSESSING OFFICER FOR CLAIMING DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. 19. IN VIEW OF THE ABOVE, WE ARE OF THE OPINION THAT WITH REGARD TO CLAIM OF DEDUCTION UNDER SECTION 35(2AB) OF THE ACT, IT IS MANDATORY TO FILE RELEVANT APPROVAL OF THE SECRETARY, DSIR TO DGIT [E] IN FORM 3CL AFTER ASSESSMENT OF THE IN - HOUSE R&D FOR CLAIMING ALLOWABLE EXPENDITURE OF CAPITAL AND REVENUE NATURE. THE APPROVAL IN FORM 3CL IS NOTHING TO DO WITH RECOGNITION AWARDED BY THE DSIR. THE DSIR, BY RECOGNIZ ES TH E IN - HOUSE R&D BASED ON THE MANDATE OF THE COMPANY/INSTITUTIONS. THE R&D ACTIVITIES CARRIED OUT BY THE COMPANY/ INSTITUTIONS BY INCURRING VARIOUS EXPENDITURE S ARE REQUIRED TO BE ASSESSED SEPARATELY BY THE SECRETARY, DSIR, WHICH IS ENTIRELY DIFFERENT FROM T HE RECOGNITION GIVEN BY THE DSIR. UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT IN THE ABSENCE OF FILING APPROVAL IN FORM 3CL BY THE ASSESSEE, THE ASSESSING OFFICER IS RIGHTLY DISALLOWED THE EXPENSES CLAIMED UNDER SECTION 35(2A B) OF THE ACT. ONCE THE ASSESSEE FILE S THE ABOVE APPROVAL IN FORM 3CL, IRRESPECTIVE OF THE DATE OF APPROVAL, THE ASSESSING OFFICER SHOULD ALLOW THE DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. THUS, THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. I.T.A. NO S . 152 & 153 /M/ 15 13 20. WI TH REGARD TO THE CLAIM OF ALLOWABILITY OF EXPENSES UNDER SECTION 35 OF THE ACT IN RESPECT OF CLAIM OF EXPENDITURE OF 43,98,602/ - , THE ASSESSEE HAS NOT RAISED ANY SIMILAR GROUND BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A) BY FILING PETITION UNDER RULE 46A . THEREFORE, WE SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO CONSIDER THE ALLOWABILITY OF EXPENSES UNDER SECTION 35 OF THE ACT, AS RAISED BEFORE US. THUS, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 21 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN I.T.A. NO. 152/MDS/2015 IS ALLOWED AND THE APPEAL IN I.T.A. NO. 153/MDS/2015 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 24 TH FEBRUARY , 201 6 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJ ARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 24 . 0 2 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / D R & 6. / GF.