Biomax Life Sciences Limited , Hyderabad V. Dy. Commissioner of Income Tax , Circle-1(2), Hyderabad

ITA 392/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3122 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-05-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2013-2014
• Appeal Filed On: 25-03-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Fuel Charges
• Section: 143(3); 115JB; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 392 /HYD/20 19 ASSESSMENT YEAR: 20 1314 M/S. BIOMAX LIFE SCIENCES LIMITED, HYDERABAD 500016. PAN: AACCB 7006 Q VS. DEPUTY COMMISSIONER OF INCOME TAX , CIRCLE - 1(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI K.C. DEVDAS REVENUE BY: SHRI SUNIL KUMAR PANDEY, DR DATE OF HEARING: 18/02/2021 DATE OF PRONOUNCEMENT: 07 /05/2021 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 1, HYDERABAD IN APPEAL NO.0076/CIT(A) - 1/HYD/2016 - 17/2017 - 18, DATED 29/06/ 2017 PASSED U/S. 143(3) R.W.S 250(6) OF THE ACT FOR THE AY 2013 - 14. 2. THE ASSESSEE HAS RAISED SEVEN GROUNDS IN ITS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE THAT: - (I) THE LD. CIT (A) HAS ERRED IN SUSTAINING THE ORDER OF THE LD. AO WITH RESPECT TO THE DISALLOWANCE OF WEIGHTED DEDUCTION CLAIMED 2 U/S. 35(1)(I) OF THE ACT FOR RS. 1,22,76,124/ - TOWARDS THE EX PENDITURE INCURRED FOR SCIENTIFIC RES E ARCH . (II) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD ADDED THE AMOUNT OF WEIGHTED DEDUCTION CLAIMED U/S. 35(1)(I) OF THE ACT OF RS. 1,22,76,124/ - WHILE COMPUTING THE BOOK PROFIT OF THE ASSESSEE U/S. 115JB OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING PHARMACEUTICALS AND NUTRITION SUPPLEMENTS FILED ITS RETURN OF INCOME FOR THE AY 2013 - 14 DECLARING LOSS OF RS. 6, 01,41,178/ - UNDER NORMAL PROVISIONS AND NIL BOOK PROFIT FOR COMPUTING TAX U/S. 115JB OF THE ACT. INITIALLY, THE RETURN WAS PROCESSED U/S. 143(1 ) OF THE ACT AND SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT VIDE ORDER DATED 19/03/2016 WHEREIN THE LD AO DISALLOWED THE CLAIM OF WEIGHTED DEDUCTION FOR RS. 1,22,76,124/ - CLAIMED U/S. 35(1)(I) OF THE ACT TOWARDS R & D EXPENDITURE. FURTHER, THE LD. AO ALSO ADDED AMOUNT OF RS. 1,22,76,124/ - TO THE BOOK PROFIT OF THE ASSESSEE WHILE COMPUTING TAX U/S. 115JB OF THE ACT . ON APPEAL, THE LD. CIT (A) CONFIRMED THE DISALLOWANCE MADE BY THE LD. AO HOWEVER, GRANTED RELIEF WITH RESPECT TO THE OTHER ISSUE. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE IS ON APPEAL BEFORE US. 3 4. GROUND NO.1: DISALLOWANCE OF R & D EXPENSES OF RS. 1,22,76,124/ - U/S. 35(1)(I) OF THE ACT: 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE LD. AO THAT THE ASSESSEE HAS CLAIMED WEIGHTED DEDUCTION U/S. 35(1)(I) OF THE ACT FOR RS. 1,22,76,124/ - TOWARDS THE R & D EXPENDITURE INCURRED BY THE ASSESSEE. HOWEVER, THE ASSESSEE FAILED T O PROVIDE ANY DOCUMENTARY EVIDENCE WITH RESPECT TO ITS CLAIM OF R & D EXPENDITURE. IT WAS ALSO REVEALED THAT THE R & D EXPENDITURE WAS INCURRED TOWARDS THE SALARY PAID, POWER & FUEL CHARGES AND PURCHASE OF SOME CHEMICALS (RAW MATERIALS). FURTHER, THE DIRECTORS MESSAGE IN THE ANNUAL REPORT CLEARLY STATED THAT NO R & D WORK HAD BEEN CARRIED OUT DURING THE RELEVANT ASSESSMENT YEAR. SINCE THE ASSESSEE COULD NOT ESTABLISH BEFORE THE LD. AO THAT IT HAD INCURRED EXPENDITURE TOWARDS R & D, THE LD. AO DISALLOWED THE CLAIM OF WEIGHTED DEDUCTION U/S. 35(1)(I) OF THE ACT. EVEN BEFORE THE LD. CIT (A), THE ASSESSEE COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM. THEREFORE, THE LD. CIT (A) UPHELD THE ORDER OF THE LD. AO. 6. AT THE TIME OF HEARING BEFORE US ALSO NEITHER THE ASSESSEE NOR ITS COUNSEL COULD PRODUCE ANY MATERIAL EVIDENCE TO PROVE THAT THE ASSESSEE HAD INCURRED EXPENDITURE TOWARDS SCIENTIFIC RESEARCH WHICH ENABLES THE CLAIM OF DEDUCTION U/S. 35(1)(I) OF THE ACT . THEREFO RE, WE DO NOT HAVE 4 ANY OTHER OPTION BUT TO CONFIRM THE ORDERS OF THE LD. REVENUE AUTHORITIES. ACCORDINGLY, WE HEREBY CONFIRM THE ORDER OF THE LD. CIT (A) ON THIS ISSUE. 7. GROUND NO.2: ADDITION OF RS. 1,22,76,124/ - TO THE BOOK PROFIT WHILE COMPUTING TAX U/S. 115JB OF THE ACT: 8. AT THE OUTSET, THE LD. AR SUBMITTED BEFORE US THAT THE LD. AO HAD ERRONEOUSLY ADDED THE AMOUNT OF RS. 1,22,76,124/ - BEING TH E CLAIM OF WEIGHTED DEDUCTION U/S. 35(1)(I) OF THE ACT TO THE BOOK PROFIT OF THE ASSESSEE W HILE COMPUTING THE TAX U/S. 115JB OF THE ACT. THE LD. AR ALSO SUBMITTED THAT THE LD. CIT (A) HAD CONFIRMED THE ORDER OF THE LD. AO ON THIS ISSUE. HOWEVER, ON PERUSING THE ORDER OF THE LD. CIT (A) WE FIND THAT THE LD. CIT (A) HAS ALLOWED THE APPEAL OF THE ASSESSEE ON THIS ISSUE. IT IS PERTINENT TO MENTION THAT THE CLAIM OF WEIGHTED DEDUCTION U/S. 35(1)(I) OF THE ACT IS A BENEFIT GRANTED TO THE ASSESSEE WHILE COMPUTING THE TAXABLE INCOME FOR THE EXPENDITURE INCURRED FOR SCIENTIFIC RESEARCH . THIS IS NOT THE ACTUAL EXPENDITURE INCURRED BY THE ASSESSEE AND THEREFORE, IT DOES NOT HAVE ANY IMPACT FOR COMPUTING EITHER THE BOOK PROFIT OF THE ASSESSEE OR THE NORMAL PROFIT OF THE ASSESSEE , HOWEVER IF ELIGIBLE IT IS A CLAIM MADE IN THE RETURN OF INCOM E . FURTHER, SINCE THE LD. CIT (A) HAS ALREADY ALLOWED THIS GROUND RAISED BY THE ASSESSEE IN HIS ORDER , THIS GROUND RAISED BY THE ASSESSEE DOES NOT SURVIVE . 5 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE 07 TH MAY, 2021 . SD/ - SD/ - (P. MADHAVI DEVI) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER HYDERABAD, DATED: 07 TH MAY, 2021 OKK COPY TO: - 1) M/S. BIOMAX LIFE SCIENCES LIMITED, 1 - 8 - 304 TO 307, 4 TH FLOOR, KAMALA TOWERS, PATTIGADDA ROAD , BEGUMPET, HYDERABAD 500 016. 2) DCIT, CIRCLE - 1(2), HYDERABAD. 3) THE CIT (A) - 1, HYDERABAD. 4) THE PR. CIT - 1, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE