DCIT., Circle-16(1), Hyderabad, Hyderabad V. M/s NSL Renewable Power Private Limited, Hyderabad

ITA 1586/HYD/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8952 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-02-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 16-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Assessee Lawyers: V RAGHAVENDRA RAO
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER AND SMT.ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO.1586/HYD/14 : ASSESSMENT YEAR 2010 - 11 DY. COMMISSIONER OF INCOME - TAX CIRCLE 16(1), HYDERABAD V/S. M/S. NSL RENEWABLE POWER (P) LTD., HYDERABAD (PAN AABCN 6009 L ) (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI RAJAT MITRA DR RESPONDENT BY : SHRI V. RAGHAVENDRA RAO DATE OF HEARING 24.2.2015 DATE OF PRONOUNCEMENT 11.3.2015 O R D E R PER P.M.JAGTAP, ACCOUNTANT MEMBER : TH IS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) V, HYDERABAD DATED 11.8.2014, WHEREBY HE ALLOWED THE CLAIM O F THE ASSESSEE FOR W EIGHTED DE D U C TION ON ACCOUNT OF R ES EARCH AND DEVELOPM E N T EXPENDITURE UN D ER S.35(2AB) OF THE ACT TO THE EXTENT OF RS.1,8 4 ,55,000. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPA N Y, WHI C H IS ENGA G ED IN TH E BU S IN E SS O F RESEARCH, PRO D U C TION, PROCESSING AND MARKETING OF AGRICULTURAL SOWING/PLANTING S EEDS, TRADING IN PESTICIDES, GE N ER A TION AND SALE OF POWER AND LETTIN G OF IMMOVABLE PROPERTIES. THE RETURN OF INCOME FOR THE YE A R UN D ER CONSIDERATION WAS FIL E D BY IT ON 30.9.2010, DECLARING TOTAL INCOME OF R S .23,18,25,430 AND BOOK PROFIT OF R S .114,72,88,700 UN D ER S.115JB OF THE ACT. IN THE SAID RETURN, R E SEARCH AND DEVELOPM E N T EXPENDITURE OF RS.8,80,51,916 WAS CLAIMED TO BE INCURRED BY THE I TA NO. 1586/H YD/20 14 M/S. N SL RENEWABLE POWER (P)LTD., HYDERABAD 2 ASSESSEE AND W E IGHTED DE D U C TION AT 150% OF SUCH EXPENDITURE AMOUN T IN G TO RS .13,20,77,874 WAS CL A IM E D UN D ER S.35(2AB) OF THE ACT. 3. DURING TH E COU R SE OF ASSESSMENT PROCEE D INGS, ALTHOUGH THE ASSESSEE PRODUCED COPY OF FORM 3CM DATED 16.6.2010, ISSUED BY THE PRESCRIB E D AUTHORITY APPROVING THE R&D FACILITY OF THE ASSESSEE FOR THE PURPO S E OF S.35(2AB), F ORM 3CL FROM THE PR E SCRIBED AUTHORITY CERTIFYING THE FULFI L MENT OF THE CON D IT I ON CON T AIN E D IN S.35(2AB) WAS NOT FU R NIS H ED. AS NOTED BY THE ASSESSING OFFICER, FOR THE PU R PO S ES OF CLAIMING DEDU CT ION UN D ER S.35(2AB), NOT ONLY TH E IN HOUSE RE S EARCH AND DEVELOPMENT FACILITY WAS REQUIRED TO B E APPROVED BY THE PRESCRIBED AUTHORITY, BU T ALSO THE EXPENDITURE INCURRED ON RESEARCH AND DEVELOPMENT WAS REQUI RE D TO B E APPROVED. ACCOR D INGLY, IN THE ABSENCE OF FORM 3CL ISSUED BY THE PRESCRIBED AUTHORITY IN SUPPORT O SUCH EXPENDITURE INCURRED BY THE ASSESSEE ON RESEA R CH AND D EVELOPM E N T , TH E C LAIM OF TH E ASSESSEE FOR ADDITIONAL WEIGHTED DE D U C TION AMOUNTING TO RS.4,40,25,958 WAS DISALLOWE D BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED UN D ER S.143(3 ) VIDE O R DER DATED 31.1.2013. 4. AGAIN S T THE ORDER PASSED BY THE ASSESSING OFFICER UN D ER S.1 4 3(3), AN APPEAL W AS PREFERRED BY TH E ASSESSEE BEFORE THE LEARNED CIT(A), WHO ALLOWED THE CLAI M OF TH E ASSESSEE FOR WEIGHTED DE DU CT I ON IN RESPECT OF RESEARCH AND DEVELOPMENT EXPENSES UN D ER S.35(2AB) OF RS.1,84,55,000, AFTER RECORDING THE FOLLOWING OBSERVATIONS IN PARAGRAPH NO.6.2 AN D 6.3 OF HIS IMPU G N E D ORDER - 6.2 DURING THE APPEAL PROCEEDINGS, UNDER POWERS VESTED U/S.250(4) OF THE ACT, THE ASSESSEE WAS ASKED TO SUBMIT FORM.3CL FOR ALLOWING THE EXPENDITURE CLAIMED U/S 35 (2AB) OF THE ACT AND THE APPELLANT SUBMITTED THE SAME. THE SUBMISSIONS OF THE APPELLANT ARE AS UNDER: 1 . THE ASSESSING OFFICER IS NOT JUSTIFIED IN I TA NO. 1586/H YD/20 14 M/S. N SL RENEWABLE POWER (P)LTD., HYDERABAD 3 DISALLOWING THE APPELLANT ' S CLAIM OF WEIGHTED DEDUCTION OF RS. 4,40,25 , 234 UNDER SECTION 35(2AB) OF THE ACT ON THE RESEARCH & DEVELOPMENT EXPENDITURE ON THE GROUND THAT FORM NO . 3CL FROM THE PRESCRIBED AUTHORITY HAS NOT BEEN FURNISHED . THE APPELLANT INCURRED AN EXPENDITURE OF RS . 8,80,51 , 916 ON RESEARCH & DEVELOPMENT EXPENDITURE AND CLAIMED A WEIGHTED DEDUCTION OF 150 % THEREON AMOUNTING TO RS . 13,20,77 , 874 . HOWEVER, THE ASSESSING OFFICER DULY ALLOWED THE ACTUAL EXPENDITURE OF RS. 8 , 80 , 51 , 916 , BUT DISALLOWED THE CLAIM OF THE WEIGHTED DEDUCTION OF RS . 4 , 40,25,234. IN COURSE OF THE ASSESSMENT PROCEEDINGS, IT WAS SUBMITTED THAT THE APPELLANT HAS BEEN GRANTED APPROVAL UNDER SECTION 35(2AB) BY THE SECRETARY, DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH, NEW DELHI FOR CARRYING OUT IN - HOUSE RESEARCH, FOR WHICH FORM NO. 3CM HAS BEEN RECEIVED AND A COPY OF THE SAME HAS BEEN FURNISHED IN COURSE OF T HE ASSESSMENT PROCEEDINGS. AS REQUIRED, THE APPELLANT HAD FURNISHED THE REQUISITE INFORMATION TO THE PRESCRIBED AUTHORITY I.E . THE SECRETARY , DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH, NEW D~/HI FOR SCRUTINY AND APPROVAL AND A COPY OF THE SAME HAS BEEN FURNISHED IN COURSE OF THE ASSESSMENT PROCEEDINGS. HOWEVER, TH E FORM NO.3CLWAS NOT RECEIVED FORM TEH DEPARTM E NT OF SCIENTIFIC & INDUSTRIAL R E SEARCH, NEW DELHI BEFORE THE COMPLETION OF THE ASSESSMENT PROC E EDIN G S AND HENCE THE SAME COULD NOT BE FUR NISHED THEN. SUB S EQU E N T TO TH E COMPLETION OF TH E ASSESSMENT PROC E EDINGS, THE FORM NO.3CL DATED 21 - 05 - 2014 WAS RECEIVED FROM TH E DEPARTMENT OF SCIENTIFIC & I NDUSTR I AL RESEARCH, NEW DELHI, A COPY OF WHICH IS FURNISHED HERETO. AS AGAINST THE APPELL A N T S CLAIM OF RE SEARCH & D EVELOPM E N T EXP ENDITURE OF RS.8,80,51,916, THE DEPARTM E NT OF SCIENTIFIC & IN D U S TRIAL RESEARCH, NEW DELHI H A D APPROVED AN E X P ENDITURE OF R S .3,69,10,000, ON WHI CH THE APPELLANT IS ENTITLED TO WEIGHTED DE D UC T ION OF RS .1,84,55,000. TH E A PP E LL A N T ACCORDINGLY PRAYS FOR ALLO W IN G TH E WEIGHTED D E DU C TION OF R S .1,84,55,000 UN D ER SECTION 35(2AB) OF THE ACT. I TA NO. 1586/H YD/20 14 M/S. N SL RENEWABLE POWER (P)LTD., HYDERABAD 4 6.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE ASSESSMENT ORDER . AS CALLED FOR BY ME U/S 250 (4) OF THE ACT, THE APPELLANT SUBMITTED FORM.3CL VIDE 3CL NO.TU/IV - 15(366)35 (2AB)/3CL/1169/2013 DATED 21 S T MAY, 2014, FROM THE DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH TECHNOLOGY, MINISTRY OF SCIENCE AND TECHNOLOGY, NEW DELH I , WHEREIN IT APPROVED THE TOTAL R&D EXPENDITURE INCURRED FOR THE AY.2010 - 11 AT RS.369.10 LAKHS . CONSIDERING THE APPROVAL OF DSIR IN FORM 3CL, I ALLOW THE WEIGHTED DEDUCTION OF 5 0% AMOUNTING TO RS.1,84,55,OOO U/S 35 (2AB) OF THE ACT OUT OF RS .4 ,40,25,234 DISALLOWED BY THE AO . AGGRIEVED BY THE ORDER OF TH E LEARNED CIT(A), R E VENU E HAS PREFERRED THE PRESENT APPEAL B E FORE TEE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE ONLY C ONTENTION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE IS THAT THE ADDITIONAL EVIDENCE FIELD BY THE ASSESSEE IN THE FORM OF FORM 3C L IS S U E D BY THE PRESCRIBED AUTHORITY HAS BEEN AD MITTED AND RELIED UPON BY THE LEARNED CIT(A) TO GIVE RELIEF TO THE ASSESSEE WITHOUT GIVIN G ANY OPPORTUNITY TO TH E ASSESSING OFFICER TO VERIFY THE SAME, WHICH IS IN CON T RA V ENTION OF RUL E 46A OF TH E INCOM E - TAX RULES. THE LEARNED COUNSEL FOR THE ASSESSEE , ON THE OTHER HAND , HAS CONTENDED THAT FORM 3CL WAS FILED BY THE ASSESSEE DURIN G THE COU R SE OF APP E LL A TE PROCEEDINGS BEFORE THE LEARNED CIT(A) AS P E R THE DIREC T ION S ISSUED BY HIM IN TERMS OF POWERS VESTED UN D ER S.250(4) OF TH E AC T, AND TH E R E FORE, RULE 46A OF THE INCOM E - TAX RUL E S HAS NO APPLICATION. IN SUPPOR T OF THIS CONTENTION, HE H AS RELIED ON THE DECISION OF THE HON'BLE GAUHATI HIGH COU R T IN TH E CA S E OF CIT V/S PODDAR SWADESH UDYOG P. LTD. ( 29 5 ITR 252 ) . IN THE SAID CASE, ADDITIONAL EVI D E N CE WAS FIL E D BY TH E ASSESSEE AS P E R THE DIRECTION OF THE LEARNED CIT(A) BY EXERCISING THE P OWERS CONFERRED UPON HIM UN D ER S.250(4) AND I TA NO. 1586/H YD/20 14 M/S. N SL RENEWABLE POWER (P)LTD., HYDERABAD 5 THE SAME WAS ADMITTED AND R ELI E D UPON BY THE LEARNED CIT(A) TO GI V E RELIEF TO TH E ASSESSEE WITHOU T GIVIN G ANY OPPORT U NITY TO THE ASSESSING OFFICER TO VERIFY THE SAME. WHEN THIS ISSUE WAS RAISED BY THE RE VENUE BEFORE THE HON'BLE GAUHATI HIGH COU R T BY RELYING ON RULE 46A OF THE IT RULES, TH E IR L ORDSHIPS HELD THAT ALTHOUGH THERE WAS APPARENTLY AN IRREGULARITY IN THE MAT T ER, I T WOULD NO T BE IN AID OF JUSTICE TO REFER THE MATTER TO THE ASSESSING OFFICER AGAIN , SIN C E BOTH THE CIT(A) AS WELL AS THE TRIBUNAL HAD RENDERE D CONCURRENT FINDING S OF FACT. 6. KEEPIN G IN VIEW THIS DECISION OF TH E HON'BLE GAUHATI HIGH COURT CIT V/S PODDAR SWADESH UDYOG P. LTD.(SUPRA) , WE DIRECTED THE LEARNED COUNSEL FOR THE ASSESSEE TO FILE COPY OF THE FORM NO.3CL ISSUED BY THE DEPARTMENT OF SCIE N TIFIC AND INDUSTRIAL R E SEAR C H, M INISTRY OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA BEFORE US. A PERUSAL O F TH E SAID FORM FIL E D BY THE LEARNED COUNSEL FOR THE ASSESSEE B EF ORE US SHOWS TH AT IT IS ISSUED IN THE NAME OF M /S. NUZIVEEDU SEEDS P VT. LTD. AND NOT IN THE NAME OF TH E ASSESSEE COMPANY. ALTHO U GH THE LEARNED CIT(A) IN TH E CAU S E TITLE O F TH E IMPU G N E D ORDER HAS INDICATED T HAT AS THE EARLIER NAME OF THE ASSESSEE COMPANY, I T IS OBSERVED THAT THERE IS NO SUCH MENTION EITHER IN THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AT EARLIER POI N T OF TIME, AND EVEN IN TH E APPEAL MEMO FI L ED BY THE ASSESSEE BEFORE THE LEARNED CIT(A). IT IS ALSO OBSERVED THAT THE LEARNED CIT(A) IN HIS IMPU G N E D ORDER HAS INDICATED EARLIER NAME O F THE ASSESSEE COMPANY AS NUZIVE E DU SEEDS L TD., WH E REAS THE FORM NO.3CL IS ISSUED IN THE NAME OF NUZIVE E DU SEEDS P VT. LTD. I T IS , THER E F O RE, NO T CL E AR AS TO WHAT EXACTLY THE EARLIER NAME OF THE ASSESSEE C OMPANY WAS , AND WHEN EXACTLY IT GOT CHANGED. IT IS ALSO NO T CLEAR THAT IF TH E RE WAS ALREADY A CHA N GE IN THE NAME OF TH E ASSESSEE CO M PANY, HO W TH E FO R M N O.3CL HAS BEEN ISSUED BY TH E PR E SCR I B E D AUTHO RI TY IN THE OLD NAME AS LATE AS ON MAY 21, 2014. I TA NO. 1586/H YD/20 14 M/S. N SL RENEWABLE POWER (P)LTD., HYDERABAD 6 MOREOVER, THE EXPENDITURE CLAIMED TO B E IN C URRE D BY THE ASSESSEE ON RES E ARCH AND DEVELOPM E N T ELIGIBLE FOR WEIGHTED DEDU CT ION AS P E R THE RETURN WAS RS.8,80,51,916 WHEREAS THE EXPENDITURE APPROVED BY TH E PRESCRIB E D AUTHORITY AS PER FORM 3CL IS ONLY RS.369.1 0 LAKHS. KEEPING IN VIEW ALL THESE AN OMA LIES AND CONTRADICTIONS, WE ARE O F THE VIEW THAT AN OPPO R T U NITY SHOULD B E GIVEN TO TH E ASSESSING OFFICER TO VERIFY FORM 3CL DATED MAY 21, 2014 ISSUED BY THE PR E S C RIBED AUTHORITY IN THE INTERESTS OF JU ST ICE. ACCOR D IN GLY, WE S E T ASID E THE IMP U GN E D OR D ER O F THE LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE MATT E R TO TH E FIL E O F THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFTER VERIFYING FORM NO.3CL , IN ACCORDANCE WITH LAW AND AFTER GIVING SUFFICIENT OPPORTUNITY O F H E ARING TO THE ASSESSEE. 7 . IN TH E R ESULT, APPEAL O F TH E R E VENUE IS TREATED AS ALLO WE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 11 TH MARCH, 2015 SD/ - SD/ - ( ASHA VIJAYARAGHAVAN ) ( P.M.JAGTAP ) JUDICIAL MEMBER ACCOUNTANT MEMBER D T/ - 11 TH MARCH, 201 5 COPY FORWARDED TO: 1. M/S. NSL RENEWABLE POWER (P) LTD., NSL ICON FOURTH FLOOR, ROAD NO.12, BANJARA HILLS, HYDERABAD 2 . DY. COMMISSIONER OF INCOME - TAX 16(1), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) V HYDERABAD 4. COMMISSIONER OF INCOME - TAX IV, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S