Cooper Corporation Pvt. Ltd, Satara V. Assistant Commissioner of Income-tax, Satara Circle , , Satara

ITA 2661/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8630 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 23-03-2021
• Assessment Year: 2014-2015
• Appeal Filed On: 16-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: KRISHNA V GUJARATHI
• Keywords: Revenue expenditure; Capital expenditure; Set aside
• Section: 13; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, J UDICIAL M EMBER . / I TA NO S . 2660 & 2661 /PUN/20 17 / ASSESSMENT YEAR S : 2013 - 14 & 2014 - 15 COOPER CORPORATION PVT. LTD. L - 3, ADDITIONAL MIDC, SATARA. PAN : AAACC9687J ....... / APPELLANT / V/S. THE JOINT COMMISSIONER OF INCOME TAX, SATARA RANGE, SATARA. / RESPONDENT A SSESSEE BY : SHRI KRISHNA V GUJARATHI REVENUE BY : SHRI S.P WALIMBE / DATE OF HEARING : 23 . 0 3 .202 1 / DATE OF PRONOUNCEMENT : 23 . 03 .2021 / ORDER PER PARTHA SARATHI CHAUDHU RY, JM : THESE TWO APPEALS PREFERRED BY THE ASSESSEE EMANATES FROM THE DIFFERENT ORDERS OF THE LD. CIT(APPEALS) - 4, PUNE DATED 19.05.2017 AND 28.04.2017 FOR THE ASSESSMENT YEARS 2013 - 14 & 2014 - 15 AS PER THE GROUNDS OF APPEALS ON RECORD. 2 ITA NO S . 2660 & 2661 /PUN/20 17 A.Y S . 2013 - 14 & 2014 - 15 2. THE LD. COUNSEL FOR THE ASSESSEE AT THE VERY OUTSET SUBMITTED THAT THE FACTS AND CIRCUMSTANCES AND THE ISSUES INVOLVED IN BOTH THESE APPEALS A RE IDENTICAL AND SIMILAR IN NATURE. THE LD. DR ALSO CONCEDED TO THESE FACTS. 3. HAVING HEARD BOTH THE PARTIES HEREIN, THESE CASES WE RE HEARD TOGETHER AND DISPOSED OF VIDE THIS CONSOLIDATED ORDER. 4. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN BOTH THESE APPEALS, GROUND NO.3 IS GENERAL IN NATURE AND HENCE, CALLS FOR NO ADJUDICATION. 5. THAT FURTHER, GROUND NO.2 IN BOTH THE AFORESAID APPEALS, THE ASSESSEE IS NOT PRESSING THIS GROUND. AFTER RECORDING THE SUBMISSIONS, WE DISMISS GROUND NO.2 AS NOT PRESSED IN RESPECT OF BOTH THE APPEALS. 6. THE ONLY EFFECTIVE GROUND FOR ADJUDICATION IN RESPECT OF BOTH THESE APPEALS IS GROUND NO.1 WHICH PERTAINS TO CONFIRMATION OF DISALLOWANCE BY THE LD. CIT(APPEALS) U/S.35(2AB) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) BEING AMOUNT OF EXPENDITURE INCURRED ON IN - HOUSE RESEARCH & DEVELOPMENT FACILITY BUT NOT REPORTED IN FORM 3CL ISSUED BY THE DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH (DSIR). THE ASSESSEE WANTS ALLOWANCE OF WEIGHTED DEDUCTION U/S.35(2AB) OF THE ACT OF RS.54,03,317/ - IN ITA NO.2660/PUN/2017 FOR ASSESSMENT YEAR 2013 - 14. SIMILARLY, IN ITA NO.2661/PUN/2017 FOR ASSESSMENT YEAR 2014 - 15, IN GROUND NO.1, WEIGHTED DEDUCTION U/S.35(2AB) OF THE ACT CLAIMED BY THE ASSESSEE IS RS.26,88,263/ - . 3 ITA NO S . 2660 & 2661 /PUN/20 17 A.Y S . 2013 - 14 & 2014 - 15 W E WOULD TAKE ITA NO.2660/PUN/2017 FOR THE ASSESSMENT YEAR 2013 - 14 AS THE LEAD CA SE IN ADJUDICATING GROUND NO.1 FOR BOTH THESE APPEALS. 7. THE BRIEF FACTS OF THE CASE ARE THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD CLAIMED WEIGHTED DEDUCTION @200% ON RS.4,24,58,703/ - U/S.35(2AB) OF THE ACT ON ACCOUNT OF CAPITAL AND REVENUE EXPENDITURE INCURRED ON IN - H OUSE R & D FACILITY IN THE RETURN OF INCOME. THE SUBMISSIONS OF THE ASSESSEE IN DETAIL IS GIVEN AT PARA 5.2 OF THE ASSESSMENT ORDER. THE ASSESSEE HAD NOT MADE THE CLAIM IN THE RETURN OF INCOME AND HENCE, THE SAME WAS NOT ALLOWED BY THE ASSESSING OFFICER. A CCORDINGLY, DEDUCTION U/S.35(1)(IV) OF THE ACT WAS RESTRICTED @200% OF THE AMOUNT QUANTIFIED IN THE APPROVAL OF THE DSIR AND THE BALANCE AMOUNT OF RS.54,03,317/ - WAS ALLOWED AS DEDUCTION @100% U/S.35(1)(IV) OF THE ACT. THUS, TOTAL DEDUCTION U/S.35(2AB) AND U/S.35(1)(IV) OF THE ACT WAS RS.7,95,14,089/ - AND THE BALANCE CLAIM OF RS.54,03,317/ - WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 8. THE LD. CIT(APPEALS) VIDE PARA 5.3 OF HIS ORDER ON THIS ISSUE RELYING ON HIS OWN DECISION IN ASSESSEES CASE FOR ASSESSMENT YEAR 2011 - 12 HAD DECIDED THE GROUND AGAINST THE ASSESSEE. THE DETAIL ED REASONING AND THE RELEVANT FINDINGS OF THE LD. CIT(APPEALS) A RE ALREADY ON RECORD. 9. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE BROUGHT TO THE NOTICE OF THE BENCH THAT THIS ISSUE HAS BEEN CONSISTENTLY HELD IN FAVOUR OF THE ASSESSEE IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010 - 11, 2011 - 12 AND 2012 - 13. THE ASSESSMENT YEARS BEFORE US ARE A.YS. 2013 - 14 & 2014 - 15. THAT BOTH THE PARTIES HAVE AGREED, THE FACTS AND CIRCUMSTANCES AND ISSUES INVOLVED ARE ABSOLUTELY IDENTICAL IN BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION . THE LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT RULE 6(7A)(B) CAME INTO EFFECT 4 ITA NO S . 2660 & 2661 /PUN/20 17 A.Y S . 2013 - 14 & 2014 - 15 FROM 01.07.2016 WHEREIN UNDER SUB - RULE(II) OF (B) OF (7A) REQUIRES THE ASSESSEE TO QUANTIFY THE EXPENDITURE INCURRED ON IN - HOUSE RESEARCH AND DEVELOPMENT FACILITY. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE TH E ASSESSMENT YEARS UNDER CONSIDERATION ARE A.YS. 2013 - 14 & 2014 - 15, THE SUB - RULE (II) OF (B) OF (7A) OF RULE 6 IS NOT APPLICABLE. 10. THE PUNE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NOS.1803 & 1804/PUN/2017 FOR THE ASSESSMENT YEARS 2011 - 12 & 2012 - 13 RELYING ON ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2010 - 11 OBSERVED AND HELD AS FOLLOWS : 5. HEARD BOTH PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REQUESTED THE ASSESSE E TO GIVE DETAILS REGARDING THE DEDUCTION CLAIMED U/S. 35(2AB) OF THE ACT. THE ASSESSEE VIDE REPLY DATED 11 - 03 - 2014 FURNISHED THE DETAILS AND COPY OF APPROVAL GRANTED BY THE DEPARTMENT OF SCIENCE AND INDUSTRIAL RESEARCH (DSIR). WE FIND THAT THE ASSESSEE INCURRED CAPITAL EXPENDITURE AT RS.1,90,62,094/ - AND REVENUE EXPENDITURE AT RS.4,97,26,668/ - TOTALLING TO RS.6,87,88,762/ - . ACCORDING TO ASSESSING OFFICER, THE DSIR HAS GIVEN APPROVAL UP TO AN EXTENT OF RS.2,79,81,000/ - AND ASSESSEE IS ENTITLED FOR DEDUCT ION AT THE RATE OF 200% TO AN EXTENT OF RS.5,59,62,000/ - AND ON REMAINING AMOUNT RS.1,28,26,762/ - (RS.6,87,88,762/ - - RS.5,59,62,000/ - ) DISALLOWED @ 100% TO AN EXTENT OF RS.64,13,344/ - . THE CIT(A) CONFIRMED THE SAME. THE CONTENTION OF LD. AR IS THAT THE RULE 6(7A)(B) CAME INTO EFFECT FROM 01 - 07 - 2016 WHEREIN UNDER SUB - RULE (II) OF (B) OF (7A) REQUIRES THE ASSESSEE TO QUANTIFY THE EXPENDITURE INCURRED ON IN - HOUSE RESEARCH AND DEVELOPMENT FACILITY. HE SUBMITS THAT SINCE THE ASSESSMENT YEAR UNDER CONSIDERATI ON IS 2011 - 12 THE (II) OF (B)(7A) OF RULE 6 IS NOT APPLICABLE. HE BROUGHT TO OUR NOTICE ON SIMILAR IDENTICAL FACTS, THIS TRIBUNAL ALLOWED THE CLAIM IN ASSESSEES OWN CASE FOR A.Y. 2010 - 11 WHEREIN ON PERUSAL OF THE SAME WE NOTE THAT THIS TRIBUNAL HELD THAT IT IS NOT THE REQUIREMENT OF LAW TO GET ANY CERTIFICATION/APPROVAL OF EXPENDITURE FROM THE DSIR IN FOR NO. 3CL AND DIRECTED THE ASSESSING OFFICER TO ALLOW THE WEIGHTED DEDUCTION EXPENDITURE INCURRED IN THE HANDS OF ASSESSEE U/S. 35(2AB) OF THE ACT. FOR R EADY REFERENCE THE PARA NO. 18 IS REPRODUCED HERE - IN - BELOW : 18. APPLYING THE AFORESAID RATIO TO THE PRESENT SET OF FACTS, WHERE IT IS NOT THE REQUIREMENT OF LAW TO GET ANY CERTIFICATION / APPROVAL OF EXPENDITURE FROM THE DSIR IN FORM NO.3CL, THERE IS NO MERIT IN THE ORDERS OF AUTHORITIES BELOW IN DENYING WEIGHTED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT. IT MAY FURTHER BE POINTED OUT THAT THE ASSESSEE ON A LATER DATE HAD RECEIVED THE SAID FORM NO.3CL FROM THE DSIR ON 08.04.2013. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW WEIGHTED DEDUCTION AT 150% OF EXPENDITURE INCURRED IN THE HANDS OF ASSESSEE UNDER SECTION 35(2AB) OF THE ACT. HENCE, REVISED GROUND OF APPEAL NO.1 RAISED BY ASSESSEE IS ALLOWED. 5 ITA NO S . 2660 & 2661 /PUN/20 17 A.Y S . 2013 - 14 & 2014 - 15 6. SHRI S.P. WALIMBE, THE LD. DR DID NOT DISP UTE THE OBSERVATION MADE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2010 - 11. THEREFORE, IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM DEDUCTION @ 200% AND THEREFORE, WE DIRECT THE AO TO ALLOW REMAINING @ 100%. THUS, THE ADDITIO N MADE TO AN EXTENT OF RS.64,13,618/ - IS DELETED. THUS, GROUND NO. 1 RAISED BY THE ASSESSEE IS ALLOWED. 11. IN THE SIMILAR FACTS AND CIRCUMSTANCES, THE LD. DR FOR THESE ASSESSMENT YEARS ALSO I.E. A.YS. 2013 - 14 & 2014 - 15, DID NOT DISPUTE THE OBSERVATI ON MADE BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2010 - 11, 2011 - 12 AND 2012 - 13(SUPRA.) 12. THE LD. COUNSEL FOR THE ASSESSEE FURTHER BROUGHT TO THE NOTICE OF THE BENCH THAT SAME VIEW HAS BEEN TAKEN BY THE BANGALORE BENCH OF THE TRIBUNAL I N THE CASE OF M/S. MAHINDRA ELECTRIC MOBILITY LTD. VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 4(1)(2), BANGALORE IN ITA NO.641/BANG/2017 DATED 14 TH SEPTEMBER, 2018 WHEREIN THE TRIBUNAL HAS OBSERVED AND HELD AS FOLLOWS: 20. FROM THE ABOVE DISCUSSION IT IS CLEAR THAT PRIOR TO 1.7.2016 FORM 3CL HAD NO LEGAL SANCTITY AND IT IS ONLY 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 SI GNIFICANCE. IN THE PRESENT CASE THERE IS NO DIFFICULTY ABOUT THE QUANTUM OF DEDUCTION U/S.35(2AB) OF THE ACT, BECAUSE THE AO ALLOWED 100% OF THE EXPENDITURE AS DEDUCTION U/S.35(2AB)(1)(I) OF THE ACT, AS EXPENDITURE ON SCIENTIFIC RESEARCH. DEDUCTION U/S.35( 1)(I) AND SEC.35(2AB) OF THE ACT ARE SIMILAR EXCEPT THAT THE DEDUCTION U/S.35(2AB) IS ALLOWED AS WEIGHTED DEDUCTION AT 200% OF THE EXPENDITURE WHILE DEDUCTION U/S.35(1)(I) IS ALLOWED ONLY AT 100%. THE CONDITIONS FOR ALLOWING DEDUCTION U/S.35(1)(I) OF THE A CT AND UNDER SEC.35(2AB) OF THE ACT ARE IDENTICAL WITH THE ONLY DIFFERENCE BEING THAT THE ASSESSEE CLAIMING DEDUCTION U/S.35(2AB) OF THE ACT SHOULD BE ENGAGED IN MANUFACTURE OF CERTAIN ARTICLES OR THINGS. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ENGAGED I N BUSINESS TO WHICH SEC.35(2AB) OF THE ACT APPLIED. THE OTHER CONDITION REQUIRED TO BE FULFILLED FOR CLAIMING DEDUCTION U/S.35(2AB) OF THE ACT IS THAT THE RESEARCH AND DEVELOPMENT FACILITY SHOULD BE APPROVED BY THE PRESCRIBED AUTHORITY. THE PRESCRIBED AUTH ORITY IS THE SECRETARY, DEPARTMENT OF SCIENTIFIC INDUSTRIAL RESEARCH, GOVT. OF INDIA (DSIR). IT IS NOT IN DISPUTE THAT THE ASSESSEE IN THE PRESENT CASE OBTAINED APPROVAL IN FORM NO.3CM AS REQUIRED BY RULE 6 (5A) OF THE RULES. IN THESE FACTS AND CIRCUMSTANC ES AND IN THE LIGHT OF THE JUDICIAL PRECEDENTS 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 DEDUCTION AT 200% OF THE EXPENDITURE AS CLAIMED BY THE ASSESSEE AND OUGHT NOT TO HAVE BEEN REST RICTED TO 100% OF THE EXPENDITURE INCURRED ON 6 ITA NO S . 2660 & 2661 /PUN/20 17 A.Y S . 2013 - 14 & 2014 - 15 SCIENTIFIC RESEARCH. WE HOLD AND DIRECT ACCORDINGLY AND ALLOW THE APPEAL OF THE ASSESSEE. THEREFORE, RESPECTFULLY FOLLOWING THE VIEW ALREADY TAKEN IN FAVOUR OF THE ASSESSEE , WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION S OF RS. 54,03,317/ - FOR ASSESSMENT YEAR 2013 - 14 AND RS.26,88,263/ - FOR THE ASSESSMENT YEAR 2014 - 15. THUS, GROUND NO.1 FOR BOTH THE ASSESSMENT YEARS I.E. 2013 - 14 & 2014 - 1 5 IN THE ASSESSEE S APPEAL ARE ALLOWED. 13. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE IN ITA NOS. 2660/PUN/2017 & 2661/PUN/2017 FOR THE ASSESSMENT YEAR 2013 - 14 & 2014 - 15 ARE PARTLY ALLOWED. ORDER PRO NOUNCED ON 23 RD DAY OF MARCH , 20 2 1 . SD/ - SD/ - INTURI RAMA RAO PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 23 RD MARCH , 202 1 SB / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS) - 4, PUNE. 4. THE PR. CIT - 3, PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. / BY ORDER, // TRUE COPY // / PRIVATE SECRETARY , / ITAT, PUNE . 7 ITA NO S . 2660 & 2661 /PUN/20 17 A.Y S . 2013 - 14 & 2014 - 15 DATE 1 DRAFT DICTATED ON 23 . 0 3 .202 1 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 23 . 03 .202 1 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER