Botil Oil Tools (I) Pvt. Ltd., New Delhi V. Pr. CIT- 2, New Delhi

ITA 2458/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 9807 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 24-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK GAUTAM
• Assessee Lawyers: A K MALHOTRA
• Keywords: Depreciation; Opportunity of being heard; Set aside
• Section: 143(3); 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH, A: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.2458 /DEL/2017 ASSESSMENT YE AR : 2012-13 BOTIL OIL TOOLS (I) PVT. LTD. WAHI & CO. LLP, CHARTERED ACCOUNTANT, K-1, KAILASH COLONY, NEW DELHI-110048 PAN-AAACB0222G VS. PR. CIT, CIRCLE-2, NEW DELHI (APPELLANT) (RESPONDENT) APPEL LANT BY : SH. A.K. MALHOTRA, C.A. RESPONDENT BY : SH. ASHOK GAUTAM, SR. DR DATE OF HEARING : 08.03.2021 DATE OF PRONOUNCEMENT : 08.03.2021 ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29.03.2017 OF THE PR. CIT, NEW DELHI, RELATING TO ASSE SSMENT YEAR 2012-13. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OIL FIELD DRILLING AN D PRODUCTION EQUIPMENT, WHICH ARE USED FOR DRILLING THE WELLS TO PULL OUT TH E OIL FROM THE WELLS. IT FILED ITS RETURN OF INCOME 30.11.2012 DECLARING AN INCO ME OF RS.12,04,31,650/-. THIS CASE WAS SELECTED FOR SCRUTINY THRO UGH CASS FOR ITA NO.2458/DEL/2017 2 EXAMINING THE DETAILS IN COMPLETE MANNER WITH SPECIFIC EMPHAS IS TO EXAMINE THE DEDUCTION CLAIMED UNDER SECTION 35, 35(2AA) AN D 35(2AB) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE ASS ESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) ON 05.12.2014 DETERM INING THE TOTAL INCOME OF THE ASSESSEE AT RS.13,75,88,960/-. 3. SUBSEQUENTLY, THE PR. CIT, ON EXAMINATION OF THE ASSE SSMENT ORDER ALONG WITH THE DATA SUBMITTED BY THE COMPANY DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, FOUND THAT THERE ARE CERTAIN OM ISSIONS IN THE BODY OF THE ASSESSMENT ORDER, WHICH HAS RESULTED INTO WRONG D ETERMINATION OF TOTAL ASSESSABLE INCOME. HE NOTED THAT THE ASSESSEE CO MPANY DEBITED AN AMOUNT OF RS.10,56,75,239/- ON ACCOUNT OF DEDUCTION U/S 35 (2AB) OF THE ACT BUT IN SUPPORT OF ITS CLAIM, THE ASSESSEE DID NOT PROD UCE MANDATORY FORM 3CM AND FORM 3CL. IN THE ABSENCE OF THESE MANDAT ORY FORMS, THE CLAIM OF THE ASSESSEE COULD NOT BE VERIFIED, HOWEVER, THE S AME WAS ALLOWED IN ASSESSMENT ORDER FOR A.Y. 2012-13. 4. ALTHOUGH, THE DATES ARE GIVEN FIXING THE HEARING, HOWE VER, THE ASSESSEE SOUGHT ADJOURNMENT AND SUBSEQUENTLY, FILED WRIT TEN SUBMISSION DATED 29.03.2017. AFTER CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE, THE PR. CIT CAME TO THE CONCLUSION THAT THE A SSESSING OFFICER NEVER ASKED THE ASSESSEE FOR FORM 3CL IN WHICH THE PRE SCRIBED AUTHORITY (DSIT) CERTIFIES THE EXPENDITURE INCURRED ON IN-HOUSE R & D TO AVAIL WEIGHTED DEDUCTION OF INCOME TAX NOR THE ASSESSEE SUBMIT TED THE SAME. IN ABSENCE OF THE FORM 3CL OF PRESCRIBED AUTHORITY, THE WEIG HTED DEDUCTION ITA NO.2458/DEL/2017 3 SHOULD NOT HAVE BEEN ALLOWED TO THE ASSESSEE. CLAUSE 14 OF 3CD DISCLOSED THAT THE ASSESSEE HAD SOLD FIXED ASSETS AT AN AMOUNT OF RS.1,55,98,000/- AND IN THIS REGARD THE ASSESSING OFFICER NEITHER VERIFIED FROM THE ASSESSEE NOR FROM DSIR WHETHER THESE ASSETS WERE ACQUIRED FOR S CIENTIFIC RESEARCH AND IF YES, WHETHER THE ASSESSEE OBTAINED PRIOR APPROVAL FROM THE DSIT IN RESPECT OF SALE OF FIXED ASSETS, WHICH IS AN ESSENTIAL COND ITIONS FOR WEIGHTED DEDUCTION AS PER SUB RULE 7A(D) OF RULE 6(1) OF INCOME TAX R ULES. WITH REGARD TO SALE OF ASSETS OF RS.1,55,98,000/-, HE NOTED THAT THE ASSESSEE HAD SOLD VEHICLES AMOUNTING TO RS.1,55,35,000/- AND COMPUTERS FOR RS.63,000/- DURING THE YEAR AND SAME HAS BEEN REDUCED FR OM THE W.D.V. IN ITS DEPRECIATION CHART. 5. THE PR. CIT REFERRED TO THE SUB RULE 7A OF RULE 6 OF INCOME TAX RULES, 1962 WHICH SPECIFIES CONDITIONS FOR AVAILING WEIGHTED DED UCTION. ACCORDING TO HIM, IN VIEW OF THE ABOVE RULE SUBMISSION OF FOR M 3CL TO DIRECTOR GENERAL (INCOME TAX EXEMPTIONS) IS A CONDITION WH ICH NEEDS TO BE FULFILLED. HE OBSERVED THAT IN THIS CASE, THERE IS NOTHING O N RECORD TO SUGGEST THAT THE ABOVE SAID CONDITION WAS SATISFIED. FURT HER NO WORKING IS AVAILABLE ON RECORD TO SUGGEST AS TO HOW THE DEDUCTION OF RS.6.58 CRORE HAVE BEEN CLAIMED AS EVEN IF THE AUDIT REPORT IS CONSIDERE D RS.3,98,40,264/- WAS REQUIRED TO BE ADDED BACK BEFORE CLAIM ING U/S 35(2AB) DEDUCTION OF RS.9,45,49,060/- OR NET DEDUCTION OF RS.5,47,08,796/- SHOULD HAVE BEEN CLAIMED. SINCE, ALL THE ABOV E CONDITIONS NEEDS TO BE FULFILLED BEFORE AVAILING WEIGHTED DEDUCTION U/S 35 (2AB) WHICH ITA NO.2458/DEL/2017 4 HAS NOT BEEN LOOKED INTO BY THE ASSESSING OFFICER BEFORE ALLOWING THE SAID DEDUCTION, HE HELD THAT THE ASSESSMENT ORDER DATED 05.1 2.2014 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE . HE, THEREFORE, SET- ASIDE THE ORDER AND DIRECTED THE ASSESSING OFFICER TO PA SS A FRESH ORDER AFTER MAKING NECESSARY VERIFICATION AND AFTER GIVING DUE OPPORTUN ITY OF BEING HEARD TO THE ASSESSEE. 6. AGGRIEVED WITH SUCH ORDER OF THE PR. CIT, THE ASSES SEE IS IN APPEAL BEFORE THE TRIBUNAL BY RAISING FOLLOWING GROUNDS OF APPEAL GROUNDS OF APPEAL NO.1 CLAIM U/S 35F2AB~) AMOUNTING TO RS. 9,45,49,060/- THE HON'BLE PR. CIT HAS TAKEN THE GROUND FOR REOPENING OF THE LD. ACIT, VIDE ORDER PASSED U/S 143(3) DATED 05.12.2014 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE, BECAUSE LD. ACIT DID NOT VERIFY THE DETAILS OF CLAIM U/S 35(2AB), WHICH IS G IVEN TO A MANUFACTURING COMPANY WHOSE R&D FACILITIES ARE RECOG NIZED BY DSIR AND THE ASSESSEE SHOULD HAVE APPROVAL OF CLAIM OF E XPENDITURE U/S 35(2AB) ON FORM 3CM. THE HON'BLE PR. CIT FURTHER ASSUMED THAT THE CONDITION S PERTAINING TO RULE 6(7A) IN REGARD TO SALE OF ASSETS OF RS. 1,55,98,000/ - BY THE ASSESSEE COMPANY IS WITHOUT TAKING THE APPROVAL OF DSIR. WHEREAS THE CLAIM OF THE ASSESSEE IS GENUINE, AS THE ASSESSEE HAS THE FOLLOWING REQUISITE APPROVALS A. ITS R&D CENTRE IS RECOGNIZED BY DSIR B. APPROVAL OF R&D EXPENDITURE U/S 35(2AB) ON FORM 3CM WAS DULY RECEIVED BY THE ASSESSEE COMPANY AND FILED BEFOR E HON'BLE PR. CIT WHICH INCLUDES THE AGREEMENT BY THE ASSESSEE WITH DSIR. ITA NO.2458/DEL/2017 5 C. FORM 3CL IS A DIRECT COMMUNICATION BY DSIR TO DG(IN V.) AND THE ASSESSEE HAS NO ROLE ON THIS. D. THE WHOLE CLAIM IS REFLECTED IN FORM 3CD OF TAX AUDIT. IT IS NOTABLE THAT THE FLON'BLE PR. CIT DID NOT RAISE AN Y QUERY ON SALE OF ASSETS BY THE ASSESSEE COMPANY, THEREFORE, IT IS PRESUMPTION. HOWEVER, SALE OF ASSETS AS QUOTED BY THE HON'BLE PR. CI T ARE NOT A PART OF THE R&D ASSETS AS DEFINED UNDER RULE 6(7A) OF THE INCOME TAX ACT 1962. GROUNDS OF APPEAL NO.2 CLAIM OF R&D EXPENDITURE U/S 35FL)(IV) FOR RS.1,11,26,179/- THE ASSESSEE HAS CLAIMED DEDUCTION U/S 35(L)(IV) AS R EFLECTED IN FORM 3CD AT 100% PERTAINING TO R&D ASSET (BUILDING) W HICH AMOUNT IS NOT PART OF CLAIM U/S 35(2AB). THE CLAIM OF THE ASSE SSEE IS GENUINE. IN VIEW OF THE ABOVE, THE ORDER PASSED BY THE HON'BLE PR. CIT IS ARBITRARY, UNLAWFUL AND IS AGAINST THE CANNONS OF NATU RAL JUSTICE AND IS PRAYED TO BE CANCELLED. 7. THE LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO V ARIOUS CASE LAWS, SUBMITTED THAT IT IS NOT A CASE OF NO ENQUIRY. THE A SSESSING OFFICER HAS ASKED THE QUERY AND THE ASSESSEE HAS SUBMITTED V ARIOUS DETAILS, BASED ON WHICH THE ASSESSING OFFICER HAS PASSED THE ORDER. TH EREFORE, MERELY BECAUSE THE PR. CIT IS NOT AGREEING WITH THE VIEW TAKEN BY THE ASSESSING OFFICER, THE SAME CANNOT BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. REFERRING TO THE ORDER OF THE T RIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, H E SUBMITTED THAT THE TRIBUNAL HAS RESTORED THIS ISSUE TO THE FILE OF PR. CIT FOR DECIDING THE ISSUE AFRESH AS PER LAW. HE SUBMITTED THAT THE FACTS OF T HE PRESENT YEAR ARE ITA NO.2458/DEL/2017 6 DISTINGUISHABLE FROM THE FACTS OF EARLIER YEAR, SINCE, IN THIS YE AR, THE PR. CIT HAS GIVEN A FINDING THAT THE ASSESSEE HAS FILED FORM NO.3C M. HE, ACCORDINGLY, SUBMITTED THAT THE ORDER OF THE PR. CIT SHO ULD BE SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE ALLOWED. 8. THE LEARNED DR ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER O F THE PR. CIT. REFERRING TO THE ASSESSMENT ORDER, HE SUBMIT TED THAT ALTHOUGH THE CASE WAS SELECTED FOR SCRUTINY TO EXAMINE THE DEDUC TION CLAIMED U/S 35, 35(2AA) AND 35(2AB), HOWEVER, THE ASSESSING OFFICER HAS NOT M ENTIONED A SINGLE WORD ABOUT THE ALLOWABILITY OF THE SAME IN THE BODY OF THE ASSESSMENT ORDER. THEREFORE, THE PR. CIT WAS FULLY JUSTIFIED IN INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT. 9. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY THE BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND PR . CIT AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDER ED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND, THE ASSESSING OFFICER, IN T HE INSTANT CASE, COMPLETED THE ASSESSMENT, DETERMINING THE TOTAL INCO ME AT RS.13,75,88,960/- AGAINST THE RETURNED INCOME OF RS.12,04,31,6 50/-. ALTHOUGH, THE CASE WAS SELECTED FOR SCRUTINY FOR EXAMINING THE ALLOWABILITY OF CLAIM OF DEDUCTION U/S 35, 35(2A) AND 35(2AB), HOWEVER, THE RE IS NO DISCUSSION IN THE BODY OF THE ASSESSMENT ORDER ON THIS IS SUE. ON BEING A POINTED QUERY BY THE BENCH AS TO THE STATUS OF THE CA SE AFTER THE TRIBUNAL RESTORED THE MATTER TO THE FILE OF PR. CIT, THE LEARNED C OUNSEL FOR THE ASSESSEE EXPRESSED HIS INABILITY TO STATE THE STATUS AND FAIRLY SUBMITTED THAT ITA NO.2458/DEL/2017 7 HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE PR. CIT WITH SIMILAR DIRECTION. 10. WE FIND, THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR VIDE ITA NO.2418/DEL/2016, ORD ER DATED 24.04.2018, HAS RESTORED THIS MATTER TO THE FILE OF PR. CIT FOR DECIDING THE ISSUE AFRESH BY OBSERVING AS UNDER:- 3. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RELE VANT MATERIAL ON RECORD. IT IS SEEN FROM PAGE 2 OF THE IMPUGN ED ORDER THAT THE ASSESSEE CATEGORICALLY STATED BEFORE THE LD.C IT THAT: THE LD. A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) DID NOT CALL FOR ANY DETAIL NOR RAISED ANY QUERY IN RE GARD TO CLAIM U/S 35(2AB). THE LD. AR SUBMITTED THAT THIS INFORMATIO N WAS ERRONEOUSLY GIVEN TO THE LD. CIT INASMUCH AS THE ASSES SING OFFICER DID MAKE ENQUIRY AS WAS EVIDENT FROM HIS OR DER SHEET ENTRY DATED 03.02.2014 BY WHICH CERTAIN ENQUIRY WAS C ONDUCTED QUA DEDUCTION U/S 35(2AB) OF THE ACT. WITHOUT GOING I NTO THE AUTHENTICITY OF THE CLAIM OF DEDUCTION, WE FIND THAT T HE LD. CIT SET ASIDE THE ASSESSMENT ORDER PRIMARILY ON THE ASSESSEES SUBMISSION THAT THE ASSESSING OFFICER DID NOT CALL FO R ANY DETAIL NOR RAISED ANY QUERY. SINCE THIS POSITION DOES NOT PRIMA FACIE APPEAR TO BE CORRECT, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF CIT FOR DECIDING IT AFRESH AS PER LAW, AFTER ALLOWING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 11. RESPECTFULLY FOLLOWING THE DECISION OF THE TRIBUNAL IN AS SESSEES OWN CASE FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, WE DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF PR.CIT FOR DECIDING TH E ISSUE AFRESH AND AS ITA NO.2458/DEL/2017 8 PER FACT AND LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY T HE ASSESSEE, ARE ACCORDINGLY, ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLO WED FOR STATISTICAL PURPOSES. ODER PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARIN G ITSELF I.E. ON 08/03/2021. SD/- SD/- (SUCHITRA KAMBLE) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI/DATED- 08.03.2021 F{X~{T COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSISTANT REGISTRAR, ITAT, DELHI