M/s Park Control and Communications Pvt Ltd, Bengaluru V. Deputy Commissioner of Income Tax, Circle-5(1)(2), Bengaluru

ITA 17/BANG/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1341 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 03-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V CHANDRASHEKHAR
• Keywords: Set aside
• Section: 251

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.17/BANG/2018 ASSESSMENT YEAR : 2013-14 M/S PARK CONTROL AND COMMUNICATIONS PVT. LTD., NO.22, 80 FT. ROAD, HAL 2 ND STAGE, BENGALURU-560 075. VS. THE DY. COMMISSIONER OF INCOME-TAX CIRCLE-5(1)(2), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI V CHANDRASHEKHAR, ADVOCATE RESPONDENT BY : SHRI R.N SIDDAPPAJI, ADDL. CIT (DR) DATE OF HEARING : 24.07.2019 DATE OF PRONOUNCEMENT : .09.2019 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 29/8/2017 PASSED BY LD CIT(A)-5, BENGALURU AN D IT RELATES TO ASST. YEAR 2013-14. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN REJECTING THE CLAIM OF WEIGHTED DEDUCTION @ 200% MA DE US/ 35(2AB) OF THE ACT. 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. TH E ASSESSEE IS ENGAGED IN THE PRODUCTION& SALE OF TELEMETRY INTERF ACE CARDS AND DATA ACQUISITION CARDS, DESIGN AND DEVELOPMENT OF H ARDWARE AND SOFTWARE AND MAINTENANCE SERVICES. THE ASSESSEE HA S SET UP AN ITA NO.17/BANG/2018 PAGE 2 OF 11 INHOUSE RESEARCH AND DEVELOPMENT FACILITY AND THE S AME HAS BEEN APPROVED BY THE DEPARTMENT OF SCIENTIFIC AND INDUST RIAL RESEARCH, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVT. OF INDIA VIDE ITS APPROVAL DATED 21/3/2013 GIVEN IN FORM 3CM FOR THE PERIOD FR OM 1/4/2012 TO 31/3/2015. THE YEAR UNDER CONSIDERATION FALLS I N BETWEEN THE ABOVE SAID PERIOD. 4. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED DE DUCTION U/S 35(2)AB) TO THE TUNE OF 51.03 LAKHS, BEING 200% OF THE EXPENDITURE INCURRED ON RESEARCH AND DEVELOPMENT OF RS.25.51 LA KHS. THE AO NOTICED THAT THE ASSESSEE HAS FURNISHED FORM NO.3CL ISSUED BY DSIR, NEW DELHI WHEREIN AN AMOUNT OF RS.2,63,000/- ALONE WAS FOUND TO HAVE BEEN APPROVED. ACCORDINGLY THE AO RE STRICTED THE DEDUCTION U/S 35(2AB) OF THE ACT TO THE EXTENT OF 2 00% OF 2.63 LAKHS REFERRED ABOVE I.E TO THE EXTENT OF RS.5,26,0 00/- ACCORDINGLY HE DISALLOWED THE EXCESS CLAIM OF RS.45.77 LAKHS. THE LD CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 5. WE HEARD THE PARTIES AND PERUSED THE RECORD. WE NOTICED THAT THE ISSUE AS TO WHETHER FURNISHING OF FORM NO. 3CL IS MANDATORY FOR ALLOWING DEDUCTION U/S 35(2AB) OF THE ACT CAME TO BE CONSIDERED BY THE COORDINATE BENCH IN TH E CASE OF M/S MAHINDRA ELECTRIC MOBILITY LTD., VS. ACIT (ITA NO.6 41/BANG/2017 DATED 14/9/2018) AND THE TRIBUNAL, BY CONSIDERING T HE DECISION RENDERED IN THE FOLLOWING CASES, HELD THAT PRIOR TO 1/7/2016, FORM NO.3CL HAD NO LEGAL SANCTITY. IT WAS FURTHER HELD THAT, ONLY W.E.F 1/7/2016, IN VIEW OF THE AMENDMENT MADE TO RULE 6(7 A((B) OF THE ITA NO.17/BANG/2018 PAGE 3 OF 11 INCOME-TAX ACT RULES, THE QUANTIFICATION OF WEIGHTE D DEDUCTION ALLOWABLE U/S 35(2AB) OF THE ACT HAS TO BE BASED ON FROM NO.3CL AND HENCE THE SAID FORM HAS OBTAINED SIGNIFICANCE. A) QUMINE INDIA LTD. VS. DCIT, ITA NO.309/BUN/2014 DT. B) M/S SHREE BIOTECH LABORATORIES INDIA LTD., VS. ACIT 385/HYD/2014 DT. 24.9.2014 C) CIT VS. SADANVIKHAS INDIA LTD., 335 ITR 117 (DEL) D) CIT VS. CLARIS LIFE SCIENCES LTD., 326 ITR 251 6. FOR THE SAKE OF CONVENIENCE WE EXTRACT BELOW THE OPERATIVE PORTION OF THE ORDER PASSED IN THE CASE OF MAHINDRA ELECTRIC MOBILITY LTD., (SUPRA). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEAR NED DR RELIED ON THE ORDER OF THE AO/CIT(A). THE LEARNED C OUNSEL FOR THE ASSESSEE REITERATED SUBMISSIONS AS WERE MAD E BEFORE THE REVENUE AUTHORITIES AND PLACED RELIANCE ON SOME JUDICIAL PRECEDENTS ON IDENTICAL ISSUE RENDERE D BY VARIOUS BENCHES OF ITAT AND HONBLE HIGH COURTS. 14. FOR AY 2012-13, THE PREVIOUS YEAR IS FY 2011-1 2 I.E., THE PERIOD FROM 1.4.2011 TO 31.3.2012. THE FACTS ON RECORD GO TO SHOW THAT THE ASSESSEES IN-HOUSE R & D FACILITIES WAS APPROVED BY THE DSIR, GOVT. OF INDIA , MINISTRY OF SCIENCE AND TECHNOLOGY FOR AY 2012-13 V IDE THEIR LETTER DATED 20.5.2009, A COPY OF WHICH IS PL ACED AT PAGE-30 OF THE ASSESSEES PAPER BOOK. THE APPROVAL IS FOR THE PERIOD 1.4.2009 UPTO TO 31.3.2012. THEREFOR E, THE CONDITION FOR ALLOWING DEDUCTION U/S.35(2AB) OF THE ACT HAS BEEN FULFILLED BY THE ASSESSEE. THE CLAIM OF TH E REVENUE, HOWEVER, IS THAT THE APPROVAL BY THE PRESC RIBED AUTHORITY IN FORM NO.3CM IS NOT FINAL AND CONCLUSIV E AND THE QUANTUM OF EXPENDITURE ON WHICH DEDUCTION IS TO BE ALLOWED IS TO BE CERTIFIED BY DSIR IN FORM NO.3CL. THERE IS NO STATUTORY PROVISION IN THE ACT WHICH LAYS DOW N SUCH ITA NO.17/BANG/2018 PAGE 4 OF 11 A CONDITION. WE SHALL THEREFORE EXAMINE WHAT IS FOR M NO.3CL. 15. DSIR HAS FRAMED GUIDELINES FOR APPROVAL U/S.35( 2AB) OF THE ACT. THE GUIDELINES AS ON MAY, 2010 WHICH IS RE LEVANT FOR AY 2012-13, IN SO FAR AS IT IS RELEVANT FOR THE PRE SENT APPEAL, WAS AS GIVEN BELOW. (I) AS PER GUIDELINE 5 (IV) OF THE GUIDELINES SO FR AMED, EVERY COMPANY WHICH HAS OBTAINED AN APPROVAL FROM THE PRESCRIBED AUTHORITY SHOULD ALSO SUBMIT AN UNDERTAK ING AS PER PART C OF FORM NO. 3CK TO MAINTAIN SEPARATE ACC OUNTS FOR EACH R&D CENTRE APPROVED UNDER SECTION 35(2AB) BY THE PRESCRIBED AUTHORITY, AND TO GET THE ACCOUNTS DULY AUDITED EVERY YEAR BY AN AUDITOR AS DEFINED IN SUBSECTION ( 2) OF SECTION 288 OF THE IT ACT 1961. (THE STATUTORY AUDI TORS OF THE COMPANY SHOULD AUDIT THE R&D ACCOUNTS. TO FACILITAT E THIS AUDIT SEPARATE BOOKS OF ACCOUNTS FOR R&D SHOULD BE MAINTAINED. ALSO, THE STATUTORY AUDITORS SHOULD SIG N THE AUDITORS CERTIFICATE IN THE DETAILS REQUIRED TO BE SUBMITTED AS PER ANNEXURE-IV OF THE GUIDELINES TO FACILITATE SUB MISSION OF REPORT IN FORM 3CL). (II) AS PER GUIDELINE 5(VI) OF THE GUIDELINES, THE AUDITED ACCOUNTS FOR EACH YEAR MAINTAINED SEPARATELY FOR EACH APPROV ED CENTRE SHALL BE FURNISHED TO THE SECRETARY, DEPARTM ENT OF SCIENTIFIC & INDUSTRIAL RESEARCH BY 31ST DAY OF OCT OBER OF THE SUCCEEDING YEAR, ALONG WITH INFORMATION AS PER ANNE XURE-IV OF THE GUIDELINES. (III) AS PER GUIDELINE 5(IX) EXPENDITURES, WHICH AR E DIRECTLY IDENTIFIABLE WITH APPROVED R&D FACILITY ONLY, SHALL BE ELIGIBLE FOR THE WEIGHTED TAX DEDUCTION. HOWEVER, EXPENDITUR E IN R&D ON UTILITIES WHICH ARE SUPPLIED FROM A COMMON S OURCE WHICH ALSO SERVICES AREAS OF THE PLANT OTHER THAN R &D MAY BE ADMISSIBLE, PROVIDED THEY ARE METERED/MEASURED A ND SUBJECT TO CERTIFICATION BY A CHARTERED ACCOUNTANT. ITA NO.17/BANG/2018 PAGE 5 OF 11 (IV) AS PER GUIDELINE 5 (X) EXPENDITURE ON MANPOWER FROM DEPARTMENTS, OTHER THAN R&D CENTRE, SUCH AS MANUFACTURING, QUALITY CONTROL, TOOL ROOM ETC. INCU RRED ON SUCH FUNCTIONS AS ATTENDING MEETINGS PROVIDING ADVI CE / DIRECTIONS, ASCERTAINING CUSTOMER CHOICE/RESPONSE T O NEW PRODUCTS UNDER DEVELOPMENT AND OTHER LIAISON WORK S HALL NOT QUALIFY FOR DEDUCTION UNDER SECTION 35(2AB) OF I.T. ACT 1961. (V) AS PER GUIDELINE 10 DOCUMENTS REQUIRED TO BE SU BMITTED BY 31 ST OCTOBER OF EACH SUCCEEDING YEAR OF APPROVED PERIOD TO FACILITATE SUBMISSION OF REPORT IN FORM 3CL (2 SETS ) ARE COMPLETE DETAILS AS PER ANNEXURE-IV OF DSIR GUIDELI NES. 16. THE ASSESSEE APPLIED FOR ISSUE OF FORM NO.3CL T O THE APPROPRIATE AUTHORITY ON 24.3.2017, AFTER THE ORDER OF THE CIT(A). THE APPLICATION SO MADE BY THE ASSESSEE IS AT PAGE 43 TO 65 OF THE ASSESSEES PAPER BOOK. ACCORDING TO THE ASSESSEE, IT HAS COMPLIED WITH ALL THE REQUIREMENTS OF THE GUIDELINES FOR ISSUE OF FORM NO.3CL, BUT THE DSIR H AS ISSUED FORM NO.3CL DATED 5.4.2018 FOR AY 2014 & 15 & 2015-16 BUT NO FORM NO.3CL WAS ISSUED FOR AY 2012-1 3. THOUGH THERE HAS BEEN NO COMMUNICATION TO THE ASSES SEE IN THIS REGARD, THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT SINCE THE AUDITED ACCOUNTS WERE NOT SUBMITTED BY 31 ST OCTOBER OF THE SUCCEEDING AY, AS IS REQUIRED UNDER GUIDELINE 5 (VI), THE ASSESSEES APP LICATION WOULD NOT HAVE BEEN CONSIDERED BY THE DSIR. 17. RULE-6(7A)(B) OF THE RULES SPECIFYING THE PRESC RIBED AUTHORITY AND CONDITIONS FOR CLAIMING DEDUCTION U/S .35(2AB) OF THE ACT HAS BEEN AMENDED BY THE INCOME TAX (10 TH AMENDMENT) RULES, 2016 W.E.F. 1.7.2016, WHEREBY IT HAS BEEN LAID DOWN THAT THE PRESCRIBED AUTHORITY, I.E., DSIR SHALL QUANTIFY THE QUANTUM OF DEDUCTION TO BE ALLOWED TO AN ASSESS EE U/S.35(2AB) OF THE ACT. PRIOR TO SUCH SUBSTITUTION, THE ABOVE PROVISIONS MERELY PROVIDED THAT THE PRESCRIBED AUTH ORITY SHALL SUBMIT ITS REPORT IN RELATION TO THE APPROVAL OF IN -HOUSE R & D FACILITY IN FORM NO.3CL TO THE DGIT (EXEMPTION) WIT HIN 60 DAYS OF GRANTING APPROVAL. THEREFORE PRIOR TO 1.7.2016 T HERE WAS LEGAL SANCTITY FOR FORM NO.3CL IN THE CONTEXT OF AL LOWING DEDUCTION U/S.35(2AB) OF THE ACT ITA NO.17/BANG/2018 PAGE 6 OF 11 18. THE ISSUE AS TO WHETHER DEDUCTION U/S.35(2AB) O F THE ACT CAN BE DENIED FOR ABSENCE OF FORM NO.3CL BY THE DSIR WAS SUBJECT MATTER OF SEVERAL JUDICIAL DECISIONS RE NDERED BY VARIOUS BENCHES OF ITAT. (I) THE PUNE ITAT IN THE CASE OF CUMMINS INDIA LTD. VS. DCIT IN ITA NO.309/PUN/2014 FOR AY 2009-10 ORDER DATED 15.5.2018 HAD AN OCCASION TO CONSIDER A CASE WHERE PART OF THE CLAIM FOR DEDUCTION U/S.35(2AB) OF THE ACT WAS CLAIMED SUPPORTED BY FORM NO.3CL BUT PART OF IT WAS NOT SUP PORTED BY FORM NO.3CL. THE PUNE ITAT HELD AS FOLLOWS:- 45. THE ISSUE WHICH IS RAISED IN THE PRESENT APPEA L IS THAT WHETHER WHERE THE FACILITY HAS BEEN RECOGNIZED AND NECESSARY CERTIFICATION IS ISSUED BY THE PRESCRIBED AUTHORITY , THE ASSESSEE CAN AVAIL THE DEDUCTION IN RESPECT OF EXPENDITURE I NCURRED ON IN-HOUSE R&D FACILITY, FOR WHICH THE ADJUDICATING A UTHORITY IS THE ASSESSING OFFICER AND WHETHER THE PRESCRIBED AU THORITY IS TO APPROVE EXPENDITURE IN FORM NO.3CL FROM YEAR TO YEAR. LOOKING INTO THE PROVISIONS OF RULES, IT STIPULATES THE FILING OF AUDIT REPORT BEFORE THE PRESCRIBED AUTHORITY BY THE PERSONS AVAILING THE DEDUCTION UNDER SECTION 35(2AB) OF THE ACT BUT THE PROVISIONS OF THE ACT DO NOT PRESCRIBE ANY METHODOL OGY OF APPROVAL TO BE GRANTED BY THE PRESCRIBED AUTHORITY VIS--VIS EXPENDITURE FROM YEAR TO YEAR. THE AMENDMENT BROUGH T IN BY THE IT (TENTH AMENDMENT) RULES W.E.F. 01.07.2016, W HEREIN SEPARATE PART HAS BEEN INSERTED FOR CERTIFYING THE AMOUNT OF EXPENDITURE FROM YEAR TO YEAR AND THE AMENDED FORM NO.3CL THUS, LAYS DOWN THE PROCEDURE TO BE FOLLOWED BY THE PRESCRIBED AUTHORITY. PRIOR TO THE AFORESAID AMENDMENT IN 2016 , NO SUCH PROCEDURE / METHODOLOGY WAS PRESCRIBED. IN THE ABSE NCE OF THE SAME, THERE IS NO MERIT IN THE ORDER OF ASSESSI NG OFFICER IN CURTAILING THE EXPENDITURE AND CONSEQUENT WEIGHTED DEDUCTION CLAIM UNDER SECTION 35(2AB) OF THE ACT ON THE SURMI SE THAT PRESCRIBED AUTHORITY HAS ONLY APPROVED PART OF EXPE NDITURE IN FORM NO.3CL. WE FIND NO MERIT IN THE SAID ORDER OF AUTHORITIES BELOW. 46. THE COURTS HAVE HELD THAT FOR DEDUCTION UNDER S ECTION 35(2AB) OF THE ACT, FIRST STEP WAS THE RECOGNITION OF FACILITY BY THE PRESCRIBED AUTHORITY AND ENTERING AN AGREEMENT BETWEEN THE FACILITY AND THE PRESCRIBED AUTHORITY. ONCE SUC H AN AGREEMENT HAS BEEN EXECUTED, UNDER WHICH RECOGNITIO N HAS ITA NO.17/BANG/2018 PAGE 7 OF 11 BEEN GIVEN TO THE FACILITY, THEN THEREAFTER THE ROL E OF ASSESSING OFFICER IS TO LOOK INTO AND ALLOW THE EXPENDITURE I NCURRED ON IN- HOUSE R&D FACILITY AS WEIGHTED DEDUCTION UNDER SECT ION 35(2AB) OF THE ACT. ACCORDINGLY, WE HOLD SO. THUS, WE REVERSE THE ORDER OF ASSESSING OFFICER IN CURTAILING THE DE DUCTION CLAIMED UNDER SECTION 35(2AB) OF THE ACT BY 6,75,000/-. THUS, GROUNDS OF APPEAL NO.10.1, 10.2 AND 10.3 ARE ALLOWED. (II) THE HYDERABAD ITAT IN THE CASE OF M/S. SRI BIO TECH LABORATORIES INDIA LTD. VS. ACIT ITA NO.385/HYD/201 4 FOR AY 2009-10 ORDER DATED 24.9.2014 TOOK THE VIEW (VIDE P ARAGRAPH- 13 OF THE ORDER) THAT WHEN THE ASSESSEES R & D FAC ILITY IS APPROVED THE DEDUCTION U/S.35(2AB) OF THE ACT CANNO T BE DENIED MERELY ON THE GROUND THAT PRESCRIBED AUTHORI TY HAS NOT SUBMITTED REPORT IN FORM 3CL. 19. THE QUESTION OF ALLOWING DEDUCTION U/S.35(2AB) OF THE ACT WAS CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SADAN VIKAS (INDIA) LTD. (2011) 335 ITR 117 (DEL) WHERE AO REFUSED TO ACCORD THE BENEFIT OF THE WEIGHTED DEDUCTION TO THE ASSESSEE UNDER S. 35(2AB) ON THE G ROUND THAT RECOGNITION AND APPROVAL WAS GIVEN BY THE DSIR IN FEBRUARY/SEPTEMBER, 2006, I.E., IN THE NEXT ASSESSM ENT YEAR AND, THEREFORE, THE WEIGHTED DEDUCTION CANNOT BE AL LOWED. THE CIT(A) CONFIRMED THE ORDER OF THE AO. THE TRIBUNAL HELD THAT THE ASSESSEE WOULD BE ENTITLED TO WEIGHTED DEDUCTIO NS OF THE AFORESAID EXPENDITURE INCURRED BY THE ASSESSEE IN T ERMS OF THE S. 35(2AB) OF THE ACT AND IN COMING TO THIS CONCLUS ION, THE TRIBUNAL RELIED UPON THE JUDGMENT OF GUJARAT HIGH C OURT IN CIT VS. CLARIS LIFESCIENCES LTD. 326 ITR 251 (GUJ). IN ITS DECISION THE HONBLE GUJARAT HIGH COURT HELD THAT THE CUT-OF F DATE MENTIONED IN THE CERTIFICATE ISSUED BY THE DSIR WOU LD BE OF NO RELEVANCE. WHAT IS TO BE SEEN IS THAT THE ASSESSEE WAS IN INDULGING IN R&D ACTIVITY AND HAD INCURRED THE EXPE NDITURE THEREUPON. ONCE A CERTIFICATE BY DSIR IS ISSUED, TH AT WOULD BE SUFFICIENT TO HOLD THAT THE ASSESSEE FULFILS THE CO NDITIONS LAID DOWN IN THE AFORESAID PROVISIONS. THE HONBLE DELHI HIGH COURT FOLLOWED THE DECISION OF THE HONBLE GUJARAT HIGH COURT AND UPHELD THE DECISION OF THE TRIBUNAL. THE HONBL E DELHI HIGH COURT QUOTED THE FOLLOWING OBSERVATIONS OF THE HONBLE GUJARAT HIGH COURT AND AGREED WITH THE SAID VIEW: ITA NO.17/BANG/2018 PAGE 8 OF 11 '7. ... THE LOWER AUTHORITIES ARE READING MORE THAN WHAT IS PROVIDED BY LAW. A PLAIN AND SIMPLE READING OF THE ACT PROVIDES THAT ON APPROVAL OF THE RESEARCH AND DEVEL OPMENT FACILITY, EXPENDITURE SO INCURRED IS ELIGIBLE FOR W EIGHTED DEDUCTION. 8. THE TRIBUNAL HAS CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND TOOK THE VIEW THAT SECTI ON SPEAKS OF : (I) DEVELOPMENT OF FACILITY; (II) INCURRING OF EXPENDITURE BY THE ASSESSEE FOR DEVELOPMENT OF SUCH FACILITY; (III) APPROVAL OF THE FACILITY BY THE PRESCRIBED AU THORITY, WHICH IS DSIR; AND (IV) ALLOWANCE OF WEIGHTED DEDUCTION ON THE EXPENDI TURE SO INCURRED BY THE ASSESSEE. 9. THE PROVISIONS NOWHERE SUGGEST OR IMPLY THAT RES EARCH AND DEVELOPMENT FACILITY IS TO BE APPROVED FROM A PARTI CULAR DATE AND, IN OTHER WORDS, IT IS NOWHERE SUGGESTED THAT D ATE OF APPROVAL ONLY WILL BE CUT-OFF DATE FOR ELIGIBILITY OF WEIGHTED DEDUCTION ON THE EXPENSES INCURRED FROM THAT DATE O NWARDS. A PLAIN READING CLEARLY MANIFESTS THAT THE ASSESSEE H AS TO DEVELOP FACILITY, WHICH PRESUPPOSES INCURRING EXPEN DITURE IN THIS BEHALF, APPLICATION TO THEPRESCRIBED AUTHORITY , WHO AFTER FOLLOWING PROPER PROCEDURE WILL APPROVE THE FACILIT Y OR OTHERWISE AND THE ASSESSEE WILL BE ENTITLED TO WEIG HTED DEDUCTION OF ANY AND ALL EXPENDITURE SO INCURRED. T HE TRIBUNAL HAS, THEREFORE, COME TO THE CONCLUSION THAT ON PLAI N READING OF S. ITSELF, THE ASSESSEE IS ENTITLED TO WEIGHTED DED UCTION ON EXPENDITURE SO INCURRED BY THE ASSESSEE FOR DEVELOP MENT OF FACILITY. THE TRIBUNAL HAS ALSO CONSIDERED R. 6(5A) AND FORM NO. 3CM AND COME TO THE CONCLUSION THAT A PLAIN AND HARMONIOUS READING OF RULE AND FORM CLEARLY SUGGEST S THAT ONCE FACILITY IS APPROVED, THE ENTIRE EXPENDITURE S O INCURRED ON DEVELOPMENT OF R&D FACILITY HAS TO BE ALLOWED F OR WEIGHTED DEDUCTION AS PROVIDED BY S. 35(2AB). THE TRIBUNAL HAS ALSO CONSIDERED THE LEGISLATIVE INTENTION BEHIN D ABOVE ENACTMENT AND OBSERVED THAT TO BOOST UP RESEARCH AN D DEVELOPMENT FACILITY IN INDIA, THE LEGISLATURE HAS PROVIDED THIS PROVISION TO ENCOURAGE THE DEVELOPMENT OF THE FACIL ITY BY ITA NO.17/BANG/2018 PAGE 9 OF 11 PROVIDING DEDUCTION OF WEIGHTED EXPENDITURE. SINCE WHAT IS STATED TO BE PROMOTED WAS DEVELOPMENT OF FACILITY, INTENTION OF THE LEGISLATURE BY MAKING ABOVE AMENDMENT IS VERY C LEAR THAT THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE ON DEVELOPMENT OF FACILITY, IF APPROVED, HAS TO BE ALL OWED FOR THE PURPOSE OF WEIGHTED DEDUCTION. 20. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT PRIO R TO 1.7.2016 FORM 3CL HAD NO LEGAL SANCTITY AND IT IS O NLY W.E.F 1.7.2016 WITH THE AMENDMENT TO RULE 6(7A)(B) OF THE RULES, THAT THE QUANTIFICATION OF THE WEIGHTED DEDUCTION U /S.35(2AB) OF THE ACT HAS SIGNIFICANCE. IN THE PRESENT CASE TH ERE IS NO DIFFICULTY ABOUT THE QUANTUM OF DEDUCTION U/S.35(2A B) OF THE ACT, BECAUSE THE AO ALLOWED 100% OF THE EXPENDITURE AS DEDUCTION U/S.35(2AB)(1)(I) OF THE ACT, AS EXPENDIT URE ON SCIENTIFIC RESEARCH. DEDUCTION U/S.35(1)(I) AND SEC .35(2AB) OF THE ACT ARE SIMILAR EXCEPT THAT THE DEDUCTION U/S.3 5(2AB) IS ALLOWED AS WEIGHTED DEDUCTION AT 200% OF THE EXPEND ITURE WHILE DEDUCTION U/S.35(1)(I) IS ALLOWED ONLY AT 100 %. THE CONDITIONS FOR ALLOWING DEDUCTION U/S.35(1)(I) OF T HE ACT AND UNDER SEC.35(2AB) OF THE ACT ARE IDENTICAL WITH THE ONLY DIFFERENCE BEING THAT THE ASSESSEE CLAIMING DEDUCTI ON U/S.35(2AB) OF THE ACT SHOULD BE ENGAGED IN MANUFAC TURE OF CERTAIN ARTICLES OR THINGS. IT IS NOT IN DISPUTE TH AT THE ASSESSEE IS ENGAGED IN BUSINESS TO WHICH SEC.35(2AB) OF THE ACT APPLIED. THE OTHER CONDITION REQUIRED TO BE FULFILL ED FOR CLAIMING DEDUCTION U/S.35(2AB) OF THE ACT IS THAT T HE RESEARCH AND DEVELOPMENT FACILITY SHOULD BE APPROVED BY THE PRESCRIBED AUTHORITY. THE PRESCRIBED AUTHORITY IS T HE SECRETARY, DEPARTMENT OF SCIENTIFIC INDUSTRIAL RESE ARCH, GOVT. OF INDIA (DSIR). IT IS NOT IN DISPUTE THAT TH E ASSESSEE IN THE PRESENT CASE OBTAINED APPROVAL IN FORM NO.3CM A S REQUIRED BY RULE 6 (5A) OF THE RULES. IN THESE FACT S AND CIRCUMSTANCES AND IN THE LIGHT OF THE JUDICIAL PREC EDENTS ON THE ISSUE, WE ARE OF THE VIEW THAT THE DEDUCTION U/ S.35(2AB) OF THE ACT OUGHT TO HAVE BEEN ALLOWED AS WEIGHTED D EDUCTION AT 200% OF THE EXPENDITURE AS CLAIMED BY THE ASSESS EE AND OUGHT NOT TO HAVE BEEN RESTRICTED TO 100% OF THE EX PENDITURE INCURRED ON SCIENTIFIC RESEARCH. WE HOLD AND DIRECT ACCORDINGLY AND ALLOW THE APPEAL OF THE ASSESSEE. ITA NO.17/BANG/2018 PAGE 10 OF 11 7. IN THE INSTANT CASE, THE YEAR UNDER CONSIDERATIO N BEING ASST. YEAR 2014-15, THE SAME WOULD FALL PRIOR TO 1/4/2016 AND HENCE THE TAX AUTHORITIES ARE NOT JUSTIFIED FOR INSISTING ON PRODUCTION OF FORM NO.3CL FOR ALLOWING DEDUCTION U/S 35(2AB) OF THE AC T. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LD CIT(A) AND DIRECT THE AO TO ALLOW THE DEDUCTION @ 200% OF THE EXPENDITURE INCUR RED BY THE ASSESSEE, AFTER EXAMINING THE CLAIM FROM THE BOOKS OF ACCOUNTS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2019. SD/ - (BEENA PILLAI) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 12TH SEPTEMBER, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE. ITA NO.17/BANG/2018 PAGE 11 OF 11 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. DICTATION NOTE ENCLOSED . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER .