DCIT, New Delhi V. M/s. Sanden Vikas India Ltd., New Delhi

ITA 3943/DEL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3023 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 16-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

1 ITA NO. 3943/DEL/2014 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT M EMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 3943/DEL/2014 (ASSESSMENT Y EAR 2009-10) DCIT CIRCLE-7(1) NEW DELHI (APPELLANT) VS SANDEN VIKAS INDIA LTD. C/O. N. NARASIMHAN & CO. 211, HANS BHAWAN, 1, BAHADUR SHAH ZAFAR MARG, NEW DELHI AABCS3174M (RESPONDENT) APPELLANT BY SH. N.K. BANSAL, SR. DR RESPONDENT BY SH. K. SAMPATH, ADV ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER DATED 24/4/2014 PASSED BY CIT(A)-X, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS FOLLOWS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN ALLOWING DEDUCTION OF RS.18,48,26,331/- AF TER ADMITTING FORM 3CL, WHICH WAS NOT SUBMITTED BY THE ASSESSEE D URING ASSESSMENT PROCEEDINGS, AT APPEAL STAGE 3. THE ASSESSEE FILED RETURN OF INCOME DECLARING LO SS OF RS.38,26,25,252/- ON 29/09/2009 ASSESSMENT WAS COMPLETED AT A LOSS O F RS.19,77,98,920/- BY DATE OF HEARING 16.05.2017 DATE OF PRONOUNCEMENT 22.05.2017 2 ITA NO. 3943/DEL/2014 DISALLOWING THE CLAIM OF DEDUCTION U/S 35(2AB) OF R S. 18,48,26,331/-. THE ASSESSEE FILED APPEAL BEFORE THE CIT (A). THE CIT (A) ALLOWED THE SAME. THE REVENUE IS BEFORE US. 4. THE LD. AR POINTED OUT THAT IN THE EARLIER ASSES SMENT YEAR 2005-06 THE SAME ISSUE IS CONTESTED BY THE REVENUE BEFORE THE H ON'BLE HIGH COURT AND THE SAME IS DISMISSED BY THE HON'BLE DELHI HIGH COURT, IN CIT VS. SANDAN VIKAS (INDIA) LTD. (2012) 22 TAXMAN.COM 90. 5. THE LD. DR COULD NOT DISTINGUISH THE SAME. 6. WE HAVE HEARD BOTH THE PARTIES, THE ISSUE RELATE D TO SECTION 35(2AB) OF THE INCOME-TAX ACT WAS ALREADY CHALLENGED BEFORE TH IS TRIBUNAL IN ASSESSMENT YEAR 2005-06 BY THE ASSESSEE AND THE ITAT HAS ALLOW ED THE SAME IN ASSESSEES FAVOUR (ITA NO. 1105/DEL/2009) THE ITAT HELD AS UND ER:- 7. WE HAVE HEARD THE PARTIES AND HAVE PERUSED THE MATERIAL ON RECORD. THE LD.CIT(A), IT IS SEEN, HAS CONFIRMED THE DISALL OWANCE, OBSERVING, INTER ALIA, THAT THE FINANCIAL PERIOD INVOLVED WAS FROM 1 /4/2004 TO 31/3/2005, WHEREAS THE APPLICATION FOR RECOGNITION OF IN-HOUSE R & D FACILITY WAS MADE ONLY ON 10/1/2005, I.E, AT THE FAG END OF THE FINANCIAL YEAR; THAT AS ADMITTED BY THE ASSESSEE ITSELF VIDE ITS LETTER DAT ED 13/1/2009, THE PRESCRIBED FORM NO. 3 CL HAD NOT BEEN ISSUED BY THE DEPARTMENT OF SCIENCE; THAT CIT V. CLARIS LIFESCIENCES LTD.(SUP RA), WAS NOT APPLICABLE IN THAT CASE, THE APPLICATION HAD BEEN MADE AND APPROV AL HAD BEEN MADE IN THE SAME FINANCIAL YEAR, WHEREAS IN THE ASSESSEES CASE THERE WAS A GAP OF TWO FINANCIAL YEARS BETWEEN THE MAKING OF THE AP PLICATION AND THE GRANT OF THE APPROVAL. 8. THE DECISION IN CIT VS. CLARIS LIFESCIENCES LTD . (SUPRA), HAS BEEN REPORTED IN 221 CTR 301 (GUJ). THEREIN, THE HONBL E GUJARAT HIGH COURT HAS HELD THE PROVISIONS OF SECTION 35(2AB) DO NOT S TATE OR IMPLY THAT THE R & D FACILITY IS TO BE APPROVED FROM A PARTICULAR DA TE, OR THAT IT IS ONLY THE DATE OF APPROVAL THAT WOULD BE THE CUTOFF DATE FOR ELIGIBILITY OF WEIGHTED DEDUCTION ON THE EXPENSES INCURRED FROM THAT DATE O NWARDS; THAT A PLAIN READING OF THE SECTION SHOWS THAT THE ASSESSEE HAS TO DEVELOP THE FACILITY, WHICH PRE-SUPPOSES INCURRING THE EXPENDITURE IN THI S BEHALF, APPLICATION TO THE PRESCRIBED AUTHORITY, WHO, AFTER FOLLOWING THE PROPER PROCEDURE, WILL 3 ITA NO. 3943/DEL/2014 APPROVE THE FACILITY, OR OTHERWISE, AND THE ASSESSE E WILL BE ENTITLED TO WEIGHTED DEDUCTION OF ANY AND ALL EXPENDITURE SO IN CURRED. 9. THIS DECISION, IN OUR CONSIDERED OPINION, HAS WR ONGLY BEEN DISTINGUISHED BY THE LD. CIT(A) . IT DOES NOT MATTE R THAT IN THAT CASE, THE MAKING OF THE APPLICATION AND THE GRANT OF APPROVAL CAME ABOUT IN THE SAME FINANCIAL YEAR, WHEREAS IN THE ASSESSEES CASE , THERE WAS A GAP OF TWO FINANCIAL YEARS BETWEEN THE TWO ACTS. WHAT IS PERTINENT IS THAT THE ASSESSEE DID MAKE AN APPLICATION, WHICH HAS BEEN OB SERVED IN THE IMPUGNED ORDER ALSO. IT IS ALSO A FACT THAT THE FO RM 3 CL WAS GIVEN BY THE AUTHORITY IN THE SUBSEQUENT YEAR. THE LD. CIT(A) H AS BEEN OF THE OPINION THAT IT WAS AT THE FAG END OF THE ASSESSEE THAT THE ASSESSEE MADE THE APPLICATION. THIS, HOWEVER, DOES NOT ACT PREJUDICI ALLY TO THE ASSESSEE. 10. IN VIEW OF CIT(A) VS. CLARIS LIFESCIENCES LTD. (SUPRA), THEREFORE, THE ASSESSEE IS ENTITLED TO WEIGHTED DEDUCTION CLAIMED U/S 35(2AB) OF THE ACT AND WE HOLD SO. THE GRIEVANCE OF THE ASSESSEE IS, AS SUCH, FOUND TO BE JUSTIFIED AND IS ACCEPTED AS SUCH. 7. THE SAME WAS CONFIRMED BY THE HONBLE DELHI HIGH COURT. THE ISSUE INVOLVED IN THIS APPEAL IS SIMILAR TO THAT OF FOR T HE ASSESSMENT YEAR 2005-06. THEREFORE, THE APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22ND MAY, 20 17 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 22/05/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 4 ITA NO. 3943/DEL/2014 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 16/05/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 17/05/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 22.05.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 22.05.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.