ADVANCED ENZYME TECHNOLOGIES LTD (FORMERLY, ADVANCED BIOCHEMICALS LIMITED ), THANE V. ASST CIT CIR 1, THANE

ITA 5172/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3323 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 07-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RA J IV HARIT; MICHAEL JERALD
• Keywords: Retrospective amendment; Competent authority; Capital expenditure
• Section: 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENCH M UMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMB ER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NOS.866 & 5172/MUM/2017 ( ASSESSMENT YEARS: 2011-12 & 2012-13 ) ADVANCE ENZYME TECHNOLOGIES LTD. A-WING, 5 TH FLOOR, SUN MAGNETICA LIC SERVICE ROAD LOUIS WADI THANE(W)-400 604 VS. ACIT,CIRCLE-1 ROOM NO.22, 6 TH FLOOR B WING, ASHAR IT PARK ROAD NO.16Z WAGLE IND.ESTATE THANE-400 604 PAN/GIR NO. AABCA4555E APPELLANT ) .. RESPONDENT ) & ITA NO.1531/MUM/2017 ( ASSESSMENT YEAR: 2011-12 ) ACIT,CIRCLE-1 ROOM NO.22, 6 TH FLOOR B WING, ASHAR IT PARK ROAD NO.16Z WAGLE IND.ESTATE THANE-400 604 VS. ADVANCE ENZYME TECHNOLOGIES LTD. A-WING, 5 TH FLOOR, SUN MAGNETICA LIC SERVICE ROAD LOUIS WADI THANE(W)-400 604 P AN/GIR NO. AABCA4555E APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI DINKLE HARIYA, AR REVENUE BY SHRI RAJIV HARIT, CIT-(DR) & SHRI MICHAEL JERALD, ADDL. CIT-DR DATE OF HEARING 10/02 /2020 DATE OF PRONOUNCEME NT 04 /0 3 /20 20 ADVANCE ENZYME TECHNOLOGIES LTD. 2 / O R D E R PER G.MANJUNATHA, ACCOUNTANT MEMBER : THESE CROSS APPEALS FILED BY THE ASSESSEE, AS WELL AS THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE LD. C OMMISSIONER OF INCOME TAX (APPEALS)-3, NASIK, DATED 29/12/2016 FOR THE AY 2011- 12. THE ASSESSEE HAS ALSO FILED APPEAL AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-1, THANE, DATE D 24/05/2017 FOR AY 2012-13. SINCE, THE FACTS AND ISSUES INVOLVE D IN THESE APPEALS FILED BY THE ASSESEE, AS WELL AS THE REVENU E ARE IDENTICAL AND THEREFORE, FOR THE SAKE OF CONVENIENCE THESE AP PEAL WERE HEARD TOGETHER AND ARE DISPOSED -OFF BY THIS CONSOLIDATED ORDER. ITA NOS. 866/MUM/2017 & ITA NO. 1531/MUM/2017, AY 2011-12:- 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEA LS) - 3, NASIK [LD. CIT A)'], ERRED IN CONFIRMING THE ACTION OF THE A.O. IN DENYING THE EXEMPTION OF RS. 17,54, 48.750/- CLAIMED BY THE APPELLANT U/S . 35 (2AB) OF THE INCOME-TAX ACT, 1961. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, NO SUCH DENIAL OF EXEMPTION WAS CALLED FOR. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTIONS U/S 35(1)(I) AND 35(1)(IV) OF THE I.T. ACT AGGREGATING TO RS. 8.77.2 4,375/- DESPITE THE FACT THAT THE SAME WERE NOT CLAIMED BY THE ASSESSEE COM PANY IN ITS RETURN OF INCOME FOR THE A.Y. 201-12. 4. THE BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING ENZYMES (BIOTECHNOLOGY PRODUCTS). THE COMPANY HAS SET UP I N HOUSE RESEARCH & DEVELOPMENT (R & D) LABS, IN THANE AND S INNAR ADVANCE ENZYME TECHNOLOGIES LTD. 3 FOR R& D ACTIVITY, WHICH IS ALSO, INTEGRATED PART O F BUSINESS ACTIVITIES OF THE ASSESSEE. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS INCURRED R&D EXPEND ITURE OF RS. 8,77,24,375/-, (INCLUDING CAPITAL EXPENDITURE O F RS. 1,86,23,348/-) AND CLAIMED WEIGHTED DEDUCTION OF RS . 17,54,48,750/- U/S 35(2AB) OF THE INCOME TAX ACT, 1 961. THE R&D FACILITY SET UP BY THE ASSESSEE HAS BEEN RECOGNIZED BY THE DEPARTMENT OF SCIENTIFIC AND INDU STRIAL RESEARCH (DSIR), MINISTRY OF SCIENCE AND TECHNOLOGY , GOVT. OF INDIA, NEW DELHI, VIDE LETTER NO. DU/IV-RD/2159/ 2000 DATED 18.01.2002. THE ASSESSEE HAS OBTAINED FURTHER RENEWAL FROM DSIR FOR A PERIOD OF THREE YEARS ON 11 .03.2003, WHICH WAS VALID UP TO 31.03.2012. THE ASSESSEE HAS STARTED ONE MORE R&D UNIT AT WAGLE INDUSTRIAL ESTATE, THANE , WHICH WAS STARTED FUNCTIONING FROM 01.03.2011. THE ASSESS EE HAS FILED AN APPLICATION FOR APPROVAL OF R&D FACILITY T O THE DSIR, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVT. OF INDIA ON 11.03.2011 AND DISPATCHED ON 24.03.2011 AND THE SAM E WAS DELIVERED TO DSIR ON 25.03.2011. THE R&D FACILITY A T DHANALAXMI INDUSTRIAL ESTATE, THANE (TRC) AND MIDC SINNAR (SRC) WERE RENEWED UP TO 31.03.2016. HOWEVER, IN R ESPECT OF WAGLE RESEARCH CENTRE NECESSARY APPROVAL FROM DS IR WAS NOT RECEIVED FOR THE IMPUGNED ASSESSMENT YEAR. THE ASSESSEE HAS FILED A WRIT PETITION BEFORE THE HONB LE DELHI HIGH COURT AGAINST DEPARTMENT OF SCIENTIFIC AND IND USTRIAL RESEARCH (DSIR) FOR NOT APPROVING THE R&D FACILITY AT WAGLE RESEARCH CENTRE, THANE. 5. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AS FILED RETURN OF INCOME ON 05-11-2011, DECLARING TOTAL INC OME AT RS. ADVANCE ENZYME TECHNOLOGIES LTD. 4 2,56,91,612/-. THE ASSESSEE HAS CLAIMED WEIGHTED DE DUCTION FOR R&D EXPENDITURE U/S 35(2AB) OF THE ACT, IN RESP ECT OF AMOUNT INCURRED FOR R&D IN ITS IN HOUSE FACILITY. THE A.O HAS DENIED DEDUCTION CLAIMED U/S 35(2AB) OF THE ACT, O N THE GROUND THAT, ALTHOUGH, THE R&D FACILITIES WERE RECO GNIZED BY THE DSIR, BUT FOR THE PURPOSE OF TAX EXEMPTION IT H AS TO BE APPROVED BY THE COMPETENT AUTHORITY I.E THE SECRETA RY, DEPARTMENT OF SCIENTIFIC AND INDUSTRIAL RESEARCH, M INISTRY OF SCIENCE AND TECHNOLOGY, GOVT. OF INDIA. SINCE, TH E R&D FACILITY HAS NOT BEEN APPROVED FROM THE COMPETENT A UTHORITY AND NECESSARY APPROVAL FORM 3CM IS NOT AVAILABLE FO R THE IMPUGNED ASSESSMENT YEAR, HE OPINED THAT WEIGHTED DEDUCTION CLAIMED U/S 35(2AB) OF THE ACT, IS NOT AV AILABLE AND ACCORDINGLY, DENIED DEDUCTION CLAIMED U/S 35(2A B) OF THE ACT. 6. BEING, AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE LD. CIT (A). BEFORE THE CIT(A), THE ASSESSEE HAS FILED ELABORATE WRITTEN SUBMISSIONS ON THIS ISSUE, WHICH HAS BEEN REPRODUCE D AT PARA 5.2 ON PAGES 6 TO 9 OF LD. CIT(A) ORDER. THE SUM AND SUBSTANCE ARGUMENT OF THE ASSESSEE BEFORE THE CIT(A ) ARE THAT, R&D FACILITY SET UP BY THE ASSESSEE AT VARIOU S CENTERS ARE RECOGNIZED BY THE DSIR FROM A.Y 2001-02 ONWARDS AND THE ASSESSEE HAS CONTINUOUSLY CLAIMED DEDUCTION FRO M A.Y 2002-03 TO 2008-09 AND THE DEPARTMENT HAS ACCEPTED THE CLAIM. THEREFORE, FOR THIS YEAR WITHOUT THERE BEING ANY CHANGE IN FACTS AND CIRCUMSTANCES, DEDUCTION CLAIMED U/S 3 5(2AB) OF THE ACT, CANNOT BE REJECTED, MERELY FOR THE REASON THAT ADVANCE ENZYME TECHNOLOGIES LTD. 5 APPROVAL WAS NOT GRANTED IN FORM 3CM BY THE SECRETA RY, DSIR, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVT. OF INDIA. 7. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ALSO TAKEN NOTE OF PROVISIONS OF SEC. 35(2AB) OF THE ACT, AND RULE 6 AND 7A OF INCOME TAX RULES, 1962, HELD THAT AS PER THE PROVISIONS OF SEC. 35(2AB) OF THE ACT, IT IS MANDATORY TO OBTAIN/SANCTION OF THE SECRETARY, D SIR, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVT. OF INDIA, FOR AVAILING WEIGHTED DEDUCTION FOR R&D EXPENDITURE. NO DOUBT, THE ASSESSEE R&D FACILITY HAS BEEN APPROVED BY THE SCIENTIST G, BUT SUCH APPROVAL IS NOT SUFFICIENT T O CLAIM WEIGHTED DEDUCTION, BECAUSE AS PER THE PROVISIONS O F SAID SECTION AND RULE 6 AND 7A OF INCOME TAX RULES, 1962 , IT IS NECESSARY TO OBTAIN APPROVAL FROM SECRETARY, DSIR, GOVT. OF INDIA. THE LD. CIT(A) FURTHER OBSERVED THAT, IF YO U GO THROUGH THE PROVISIONS OF SEC. 35(2AB) OF THE ACT AND RELAT ED RULE 6 AND 7A OF THE INCOME TAX RULES, 1962, THE ASSESSEE SHALL FILE AN APPLICATION IN FORM NO. 3CK ALONG WITH AN A GREEMENT AND IF THE PRESCRIBED AUTHORITY IS SATISFIED THAT T HE CONDITIONS PROVIDED THEREIN ARE FULFILLED, THEN IT SHALL PASS AN ORDER IN WRITING IN FORM 3CM APPROVING THE FACILITY FOR CLAI MING THE BENEFIT OF WEIGHTED DEDUCTION. SINCE, THE R&D FACI LITY OF THE ASSESSEE ARE NOT APPROVED BY THE COMPETENT AUTHORIT Y AND RELEVANT FORM 3CM IS NOT ON RECORD TO ESTABLISH THA T THE APPROVAL HAS BEEN ACCORDED FOR THE PURPOSE OF SEC. 35(2AB) OF THE ACT, FOR THE YEAR UNDER CONSIDERATION, CLAIM OF THE ASSESSEE THAT INITIAL RECOGNITION GRANTED BY THE DS IR IS SUFFICIENT ENOUGH TO CLAIM FOR WEIGHTED DEDUCTION C ANNOT BE ACCEPTED. THE LD. CIT(A) HAS DISCUSSED THE ISSUE IN LIGHT OF ADVANCE ENZYME TECHNOLOGIES LTD. 6 CERTIFICATE FURNISHED BY THE ASSESSEE FOR RECOGNIZI NG THE FACILITY BY SCIENTIST G, DSIR IN LIGHT OF PROVISIO NS OF SEC. 35(2AB) OF THE ACT, AND RULE 6 AND 7A OF THE INCOME TAX RULES, 1962, AND CAME TO THE CONCLUSION THAT THE IN ITIAL RECOGNITION GRANTED TO THE ASSESSEE IS NOT FOR THE PURPOSE OF AVAILING THE BENEFIT OF DEDUCTION U/S 35(2AB) OF TH E ACT, AND WHAT IS NECESSARY IS APPROVAL OF EXPENDITURE INCURR ED FOR THE PURPOSE BY THE COMPETENT AUTHORITY FOR THE RELEVANT PERIOD AND NECESSARY APPROVAL CERTIFICATE IN FROM 3CM. SI NCE, THE ASSESSEE HAS FAILED TO PRODUCE THE APPROVAL REQUIRE D FOR CLAIMING THE BENEFIT OF WEIGHTED DEDUCTION, HE OPIN ED THAT THERE IS NO ERROR IN THE FINDINGS RECORDED BY THE A .O FOR DENYING THE BENEFIT OF DEDUCTION U/S 35(2AB) OF TH E ACT, AND ACCORDINGLY UPHELD DISALLOWANCE OF WEIGHTED DEDUCTI ON. THE LD. CIT(A), HOWEVER ALLOWED ALTERNATE CLAIM OF THE ASSESSEE FOR DEDUCTION OF EXPENDITURE INCURRED FOR R & D PUR POSE U/S 35(1)(I) OF THE INCOME TAX ACT, 1961. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESSEE AS WELL AS THE REVENUE ARE IN A PPEAL BEFORE US. 8. THE LD. AR FOR THE ASSESSEE, AT THE TIME OF HEAR ING SUBMITTED THAT THE ISSUE INVOLVED IN APPEALS FILED BY THE ASS ESSEE FOR AY 2011- 12 AND 2012-13 IS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE DECISION OF ITAT, MUMBAI, A BENCH IN ASSESSEE OWN CASE FOR AY 2010-11 IN ITA NO.3026/MUM/2015 & ITA NO.3353/M UM/2017, WHERE UNDER IDENTICAL SET OF FACTS, THE TRIBUNAL HE LD THAT THE ASSESSEE IS ENTITLED FOR WEIGHTED DEDUCTIONS U/S 35 (2AB) OF THE I.T.ACT, 1961, IN RESPECT OF EXPENDITURE INCURRED F OR RESEARCH AND DEVELOPMENT ACTIVITIES IN ITS IN HOUSE R&D CENTERS . ADVANCE ENZYME TECHNOLOGIES LTD. 7 9. THE LD. DR, ON THE OTHER HAND, FAIRLY ACCEPTED T HAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF ITAT FOR AY 2010-11, WHERE THE APPEAL OF THE REVENUE HAS BEEN DISMISSED. HE, FURTHER SUBMITTED FOR THE YEAR UNDER CONSIDERATION, THE REVENUE HAS FILED IDENTICAL GROUNDS AND CHALLEN GED THE ORDER OF THE LD.CIT(A) IN ALLOWING DEDUCTIONS U/S 35(1)(I) & 35(1)(IV) OF THE I.T.ACT, 1961, IN RESPECT OF EXPENDITURE INCURRED F OR RESEARCH AND DEVELOPMENT FACILITIES. THE LD. AR, FURTHER SUBMITT ED THAT WHEN, THE ASSESSEE IS CLAIMING DEDUCTIONS U/S 35(2AB) AND SUC H CLAIM HAS BEEN ALLOWED BY THE TRIBUNAL, THEN IT CANNOT MAKE A LTERNATIVE CLAIM U/S 35(1)(I) OF THE I.T.ACT, 1961 AND HENCE, THE SA ME NEEDS TO BE WITHDRAWN. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. WE FIND THAT AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSEE OWN CASE FOR AY 2010-11, WHERE IT HAS BEEN HELD THAT ONCE, R&D FACILITY HAS BEEN RECOGNIZED BY THE COMPE TENT AUTHORITY, THEN DEDUCTIONS PROVIDED U/S 35(2AB) CANNOT BE DENI ED, MERELY FOR THE REASON THAT APPROVAL OF EXPENDITURE FOR THE IMP UGNED YEAR IN PRESCRIBED FORM HAS NOT BEEN RECEIVED FROM THE COMP ETENT AUTHORITY. THE RELEVANT FINDINGS OF THE TRIBUNAL ARE AS UNDER: - 11. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE IS IN THE BUSINESS OF MANUFACT URING INDUSTRIAL ENZYMES. THE ASSESSEE HAS SETUP THREE R &D FACILITIES AT VARIOUS PLACES AND SUCH R&D FACILITIE S HAS BEEN APPROVED AND RECOGNIZED BY THE COMPETENT AUTHORITY, DSIR, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVT. OF INDIA VIDE LETTER DATED 18.01.2012. THE ASSESSEE HAS OBTAINED ANOTHE R APPROVAL FROM DSIR FOR A PERIOD OF THREE YEARS WHICH WAS VAL ID UP TO 31.03.2012. THE UNDISPUTED POSITION EMERGES FROM T HE FACT BEFORE US IS THAT THE ASSESSEE HAS OBTAINED INITIAL RECOGNITION FROM COMPETENT AUTHORITY DSIR, AND SUCH RECOGNITION WAS VALID ADVANCE ENZYME TECHNOLOGIES LTD. 8 UP TO 31.07.2012 IN RESPECT OF R&D FACILITIES AT TH ANE. IN SO FAR AS, R&D FACILITY AT WAGLE INDUSTRIAL ESTATE, THANE, IT HAS COMMENCED ACTIVITIES FROM 01.02.2011 AND APPLICATIO N FOR REGISTRATION HAS BEEN FILED ON 11.03.2011. IN CASE OF ANOTHER R&D UNIT AT 135/A WAGLE INDUSTRIAL ESTATE, THANE (N TRC) THE ASSESSEE HAS COMMENCED ITS ACTIVITIES FROM 01.08.20 12. THEREAFTER, THE ASSESSEE HAS FILED AN APPLICATION F OR RECOGNITION OF NTRC VIDE LETTER DATED 12.10.2012. THE DSIR NEI THER REJECTED THE CLAIM OF APPLICATION FILED BY THE ASSE SSEE NOR COMMUNICATED THE POSITION OF APPLICATION FILED BY T HE ASSESSEE AT ANY TIME DURING THE RELEVANT PERIOD. THE ASSESS EE HAS FILED A WRIT PETITION BEFORE THE HONBLE DELHI HIGH COURT A ND CHALLENGED THE ACTION OF THE COMPETENT AUTHORITY I.E THE SECRE TARY, DSIR, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVT OF INDIA A ND THE WRIT APPLICATION FILED BY THE ASSESSEE PENDING FOR ADJUD ICATION. BE THAT AS IT MAY, BUT THE UNDISPUTED FACTS ARE THAT T HE DSIR HAS ISSUED RECOGNITION FOR ALL UNITS VIDE ITS COMMUNICA TION DATED 15.01.2014 AND SUCH RECOGNITION WAS VALID UP TO 31 .03.2016, SUBSEQUENTLY, THE RENEWAL OF RECOGNITION WAS ALSO G RANTED UP TO 31.03.2019. FURTHER, THE ASSESSEE HAS CLAIMED DEDUC TION U/S 35(2AB) OF THE ACT, FROM A.Y 2002-03 TO 2008-09 AND SUCH CLAIM HAS BEEN ACCEPTED BY THE DEPARTMENT FOR THOSE YEARS . IN FACT, THERE IS NO DISPUTE WITH REGARD TO CLAIM FOR A.Y 20 14-15 ONWARDS. THE ONLY DISPUTE IS WITH REGARD TO THE I NTERVENING PERIOD OF A.Y 2009-10 TO A.Y 2013-14, WHERE THE DEP ARTMENT HAS DENIED WEIGHTED DEDUCTION CLAIMED U/S 35(2AB) O F THE ACT, FOR THE REASON THAT NECESSARY APPROVAL FROM THE COM PETENT AUTHORITY IN FORM 3CM WAS NOT PRODUCED BEFORE THE A .O. 12. IN LIGHT OF ABOVE FACTUAL BACKGROUND, IF YOU EX AMINE THE CLAIM OF THE ASSESSEE IN LIGHT OF PROVISIONS OF SEC . 35(2AB) OF THE ACT, ONE HAS TO SEE WHETHER PERIODICAL APPROVAL / RENEWAL FROM THE COMPETENT AUTHORITY IS REQUIRED TO CLAIM T HE BENEFIT OF WEIGHTED DEDUCTION U/S 35(2AB) OF THE ACT, WHEN THE INITIAL RECOGNITION FROM THE COMPETENT AUTHORITY WAS VALID FOR THE PERIOD UNDER COVER. THE PROVISIONS OF SEC. 35(2AB) OF THE ACT, DEALS WITH A CASES WHERE A COMPANY ENGAGED IN THE BUSINES S OF MANUFACTURE OR PRODUCTION OF ANY ARTICLE OR THING I NCURS ANY EXPENDITURE ON SCIENTIFIC RESEARCH ON IN-HOUSE RESE ARCH AND DEVELOPMENT FACILITY AS APPROVED BY THE PRESCRIBED AUTHORITY, THEN THERE SHALL BE ALLOWED A DEDUCTION OF SOME EQU AL TO 150% OF SUCH EXPENSES INCURRED BY THE ASSESSEE FOR IN-HO USE RESEARCH AND DEVELOPMENT FACILITIES. FOR THIS PURP OSE, PRESCRIBED AUTHORITY IS SECRETARY, DSIR, MINISTRY O F SCIENCE AND TECHNOLOGY, GOVT OF INDIA. FURTHER, RULE 6 AND 7A OF INCOME TAX RULES, 1962 PROVIDES FOR PROCEDURE OF APPROVAL OF R&D FACILITY. AS PER RULE 6 OF THE INCOME TAX RULES, 1 962,THE PRESCRIBED AUTHORITY FOR EXPENDITURE ON SCIENTIFIC RESEARCH AND DEVELOPMENT FOR THE PURPOSE OF 35(2AB) OF THE ACT, SHALL BE THE SECRETARY, DSIR. SUB RULE (4) REQUIRES THE ASSESSE E TO FURNISH THE APPLICATION IN FORM 3CK. AS PER SUB RULE 5A, I F THE PRESCRIBED AUTHORITY IS SATISFIED THE CONDITIONS PR OVIDED IN THIS RULE AND IN SUB SEC. 2AB OF SEC. 35 OF THE ACT, ARE FULFILLED, ADVANCE ENZYME TECHNOLOGIES LTD. 9 THEN THE PRESCRIBED AUTHORITY SHALL PASS AN ORDER I N WRITING IN FROM NO. 3CM. IN THIS CASE, THERE IS NO DISPUTE WI TH REGARD TO FACT THAT THE R&D FACILITY SET UP BY THE ASSESSEE A T THREE PLACES ARE INITIALLY RECOGNIZED BY THE COMPETENT AUTHORITY . IN FACT, THE R&D FACILITY OF THE ASSESSEE HAS BEEN INITIALLY REC OGNIZED BY THE COMPETENT AUTHORITY FROM A.Y 2001-02 ONWARDS. THE ONLY DISPUTE IS WITH REGARD TO APPROVAL OF PRESCRIBED AU THORITY IN FORM NO. 3CM. THE A.O AS WELL AS THE LD. CIT(A) WAS ON THE OPINION THAT ALTHOUGH THE INITIAL RECOGNITION WAS GRANTED T O THE ASSESSEE BY THE COMPETENT AUTHORITY, BUT THE APPROVAL OF THE FACILITY FOR THE IMPUGNED PERIOD IN FORM 3CM, WAS NOT ON RECORD. THEREFORE, THEY OPINED THAT IN ABSENCE OF APPROVAL IN PRESCRIBED FORM 3CM THE ASSESSEE IS NOT ENTITLED FOR WEIGHTED DEDUCTION U/S 35(2AB) OF THE IT ACT. EXCEPT THIS, EXISTENCE OF R&D FACILITY AT THREE PLACES AND CONSEQUENT EXPENDITURE INCURRED FOR RELEVANT PURPOSE ARE NOT DISPUTED BY THE AUTHORITIE S. IN FACT, THE A.O AS WELL AS LD. CIT(A) HAVE CATEGORICALLY ACCEPT ED THAT THE ASSESSEE HAS SET UP R&D CENTRES AND INCURRED VARIOU S EXPENDITURE FOR IN HOUSE RESEARCH AND DEVELOPMENT P URPOSE. 13. IN THIS LEGAL AND FACTUAL BACKGROUND, IF YOU GO THROUGH THE CLAIM OF THE ASSESSEE TOWARDS DEDICATION CLAIMED U/ S 35(2AB) OF THE ACT, WE NEED TO EXAMINE SUCH CLAIM MADE BY THE ASSESSEE IS IN ACCORDANCE WITH PROVISIONS OF SEC. 35(2AB) OF THE ACT, AND RELEVANT RULE 6 AND 7A OF THE IT RULES, 1962. IN O RDER TO CLAIM THE BENEFIT OF WEIGHTED DEDUCTION U/S 35(2AB) OF TH E ACT, THE ASSESSEE SHOULD FULFIL TWO CONDITIONS. FIRST CONDI TION IS THERE SHOULD BE AN IN-HOUSE RESEARCH AND DEVELOPMENT FACI LITY AND SUCH FACILITY SHOULD BE RECOGNIZED / APPROVED BY TH E COMPETENT AUTHORITY. THE COMPETENT AUTHORITY FOR THIS PURPOS E HAS BEEN DEFINED AS THE SECRETARY, DSIR, MINISTRY OF SCIENCE AND TECHNOLOGY, GOVT. OF INDIA, THERE IS A PRESCRIBED P ROCEDURE FOR APPROVAL OF R&D FACILITY. RULES 6 AND 7A OF THE IN COME TAX RULES, 1962, PROVIDES FOR MECHANISM OF FILING AN AP PLICATION AND RELATED APPROVAL BY THE COMPETENT AUTHORITY. AT TH E COST OF REPETITION, WE NOTE THAT THE ASSESSEE HAS FILED ITS APPLICATION IN FORM 3CK FOR THE RELEVANT PERIOD WHICH IS PENDING B EFORE THE COMPETENT AUTHORITY. THE COMPETENT AUTHORITY NEITH ER REJECTED THE APPLICATION FILED BY THE ASSESSEE NOR SENT ANY COMMUNICATION IN THIS REGARD. THE ASSESSEE HAS CHA LLENGED THE ACTION OF THE COMPETENT AUTHORITY BY WAY OF WRIT PE TITION BEFORE THE HONBLE DELHI HIGH COURT AND SUCH WRIT PETITION FILED BY THE ASSESSEE IS PENDING FOR ADJUDICATION. BE THAT AS I T MAY, FACT REMAINS THAT ITS FACILITY HAS BEEN INITIALLY RECOGN IZED FROM THE A.Y 2001-02 ONWARDS, AND THE ASSESSEE HAS CONTINUOU SLY CLAIMED DEDUCTION U/S 35(2AB) OF THE ACT, UP TO A.Y 2008-09 AND SUCH CLAIM HAS BEEN ACCEPTED BY THE DEPARTMENT. IT IS ALSO NOT IN DISPUTE THAT FROM A.Y 2014-15 THE ASSESSEE H AS BEEN ALLOWED THE BENEFIT OF WEIGHTED DEDUCTION U/S 35(2A B) OF THE ACT. 14. HAVING SAID SO, LET US SEE LAW LAID DOWN BY VAR IOUS COURTS ON THIS ISSUE. THE HONBLE GUJARAT HIGH COURT IN T HE CASE OF CIT VS. CLARIS LIFESCIENCES LTD., (SUPRA) HAS CONSIDERE D AN IDENTICAL ADVANCE ENZYME TECHNOLOGIES LTD. 10 ISSUE IN LIGHT OF PROVISIONS OF SEC. 35(2AB) OF THE ACT, AND HELD THAT THE PROVISIONS NOWHERE SUGGEST SIMPLY THAT R& D FACILITY IS APPROVED FROM PARTICULAR DATE AND IN OTHER WORDS, I T IS NO WHERE SUGGESTED THAT DATE OF APPROVAL ONLY WILL BE CUT OF F DATE FOR ELIGIBILITY. THE COURT FURTHER HELD THAT ONCE FAC ILITY IS APPROVED, THE ENTIRE EXPENDITURE SO INCURRED ON DEVELOPMENT O F R&D FACILITY HAS TO BE ALLOWED FOR WEIGHTED DENUDATION. THE HONBLE DELHI HIGH COURT IN THE CASE OF MARUTHI SUZUKI INDI A PVT LDT., (SUPRA) VS UNION OF INDIA, HAD CONSIDERED AN IDENTI CAL ISSUE AND HELD THAT FOR AVAILING THE BENEFIT U/S 35(2AB) OF T HE ACT, WHAT IS RELEVANT IS NOT THE DATE OF RECOGNITION OR THE CUT OFF DATE MENTIONED IN THE CERTIFICATE OF THE DSIR OR EVEN TH E DATE OF APPROVAL, BUT THE EXISTENCE OF RECOGNITION. THE HO NBEL GUJARAT HIGH COURT IN THE CASE OF BANKO PRODUCT INDIA LTD., VS. DCIT (SUPRA) HAD ONCE AGAIN REITERATED ITS EARLIER POSIT ION IN THE CASE OF CLARIS LIFESCIENCE LTD. (SUPRA) AND HELD THAT ON CE AN APPLICATION IS FILED BY THE ASSESSEE TO THE PRESCRI BED AUTHORITY, THE ASSESSEE WOULD HAVE NO CONTROL OVER WHEN SUCH A PPLICATION IS PROCESSED AND DECIDED. THE HONBLE COURT FURTHE R HELD THAT PERIOD DURING WHICH THE APPROVAL IS GRANTED IS NOT RELEVANT AS LONG AS SUCH APPROVAL IS GRANTED AND EXPENDITURE HA S BEEN INCURRED FOR THIS SPECIFIED PURPOSE. THE HONBLE G UJARAT HIGH COURT IN THE CASE OF CIT VS. SUN PHARA INDIA LTD., (SUPRA) HAD ONCE AGAIN CONSIDERED ON IDENTICAL ISSUE AND HELD T HAT ONCE R&D FACILITY SET UP BY THE ASSESSEE HAS BEEN APPROV ED BY THE PRESCRIBED AUTHORITY AND NECESSARY APPROVAL WAS GRA NTED IN THE PRESCRIBED FORMAT, THEN THE COMMUNICATION IN FORM 3 CM WAS THEREAFTER BETWEEN THE PRESCRIBED AUTHORITY AND THE DEPARTMENT. IF THE SAME WAS NOT SO, SURELY THE ASSESSEE CANNOT BE MAKE THE SUFFER. THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TVS ELECTRONICS LTD., (SUPRA) HAD HELD THAT THE ASS ESSEE CANNOT BE PUNISHED FOR THE BUREAUCRATIC DELAY IN GIVING SU CH APPROVAL FOR THE YEAR IN QUESTION, WHICH WAS IN THE HANDS OF THE DEPARTMENT CONCERNED OF THE CENTRAL GOVT ITSELF. O N THE VERY FACT THAT FOR THE PERIOD ANTERIOR AND POSTERIOR TO THE YEAR IN QUESTION SUCH APPROVAL WAS VERY WELL ON THE RECORD OF THE REVENUE, WEIGHTED DEDUCTION FOR THE EXPENDITURE INC URRED ON THE SCIENTIFIC RESEARCH COULD NOT HAVE BEEN DISALLO WED BY AUTHORITIES BELOW. THE SUM AND SUBSTANCE OF RATIOS LAID DOWN BY THE HONBLE HIGH COURTS ARE THAT ONCE THE FACILI TY SET UP BY THE ASSESSEE HAS BEEN APPROVED / RECOGNIZED BY THE COMPETENT AUTHORITY, THEN SUBSEQUENT RENEWAL / COMMUNICATION OF SUCH APPROVAL IN PRESCRIBED FORM IS NOT RELEVANT AND WHA T IS RELEVANT TO DECIDE THE ENTITLEMENT OF DEDUCTION IS EXISTENCE OF SUCH FACILITY. 15. IN THIS CASE, ON PERUSAL OF FACTS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE FACILITY WAS APPROVED FROM A SSESSMENT YEAR 2001-02 AND SUCH RECOGNITION WAS CONTINUED UP TO 31.07.2012. THEREAFTER, THE ASSESSEE HAS FILED AN APPLICATION FOR RECOGNITION ON 09.06.2012 AND SUCH RECOGNITION HAS BEEN GRANTED BY THE COMPETENT AUTHORITY VIDE ITS COMMUNI CATION DATED 15.01.2014, WHICH IS VALID UP TO 31.03.2016, SUBSEQ UENTLY, THE ADVANCE ENZYME TECHNOLOGIES LTD. 11 RENEWAL HAS BEEN GRANTED UP TO 31.03.2019. FURTHER , THE A.O NEITHER DISPUTED EXISTENCE OF R&D FACILITY NOR GENU INENESS OF EXPENDITURE INCURRED BY THE ASSESSEE. ONCE EXISTEN CE OF R&D FACILITY WAS NOT DISPUTED AND EXPENDITURE FOR THAT PURPOSE IS GENUINE IN NATURE AND ALSO THE RECOGNITION WAS GRAN TED WAY BACK IN 2001-02, WHICH IS VALID EVEN NOW, THEN MERE LY FOR THE REASON OF NON ISSUE OF APPROVAL FOR CERTAIN PERIOD IN PRESCRIBED FORM 3CM BY THE COMPETENT AUTHORITY, EVEN THOUGH, T HE ASSESSEE HAS MADE AN APPLICATION FOR APPROVAL IN PR ESCRIBED FORM 3CK AND ALSO FILED NECESSARY EVIDENCE INCLUDIN G DETAILS OF EXPENDITURE THEN, THE ASSESSEE CANNOT BE FURNISHED NON ISSUE OF SUCH APPROVAL BY THE COMPETENT AUTHORITY AND WEIGHT ED DEDUCTION CLAIMED U/S 35(2AB) CANNOT BE DENIED. 16. COMING BACK TO THE CASE LAWS RELIED UPON BY LD. DR FOR THE REVENUE. THE LD. DR HAS VEHEMENTLY ARGUED THE CASE IN LIGHT OF THE DECISION OF ITAT MUMBAI, IN THE CASE O F PCP CHEMICALS PVT LTD., VS. ITO (SUPRA) AND SUBMITTED T HAT FACTS OF THE PRESENT CASE ARE ENTIRELY SIMILAR TO FACTS CONS IDERED BY THE TRIBUNAL AND HENCE THE ASSESSEE CASE IS COVERED SQU ARELY BY THE DECISION OF ITAT MUMBAI, IN THE CASE OF PCP CHE MICALS PVT LTD., VS. ITO. WE FIND THAT ALTHOUGH THE TRIBUNAL HAS DISTINGUISHED THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CLARIS LIFESCIENCE LTD., VS. CIT AND HONBL E DELHI HIGH COURT IN THE CASE OF MARUTHI SUZUKI INDIA LTD. VS. UNION OF INDIA, BUT FACT REMAINS THAT IN THE CASE OF PCP CHEMICAL P VT LTD., VS. ITO (SUPRA) THE ASSESSEE HAS FILED AN APPLICATION F OR RECOGNITION / APPROVAL ON 12.08.2011 AND IN FORM NO. 3CK AND TH E COMPETENT AUTHORITY HAS APPROVED THE FACILITY FOR T HE PERIOD FROM 01.04.2011 TO 31.03.2013. THE ASSESSEE HAS CLAIMED DEDUCTION FOR THE A.Y 2011-12 FOR WHICH NEITHER RECOGNITION N OR APPROVAL FROM THE COMPETENT AUTHORITY WAS RECEIVED BY THE A SSESSEE. UNDER THOSE FACTS, THE TRIBUNAL CAME TO THE CONCLUS ION THAT WHEN THE INITIAL APPROVAL / RECOGNITION WAS GRANTED WITH EFFECT FROM 01.04.2011 ON THE BASIS OF APPLICATION FILED B Y THE ASSESSEE ON 12.08.2011 THEN THE DEDUCTION FOR EXPEN DITURE INCURRED FOR THE PREVIOUS PERIOD I.E BEFORE THE FAC ILITY WAS APPROVED BY THE COMPETENT AUTHORITY CANNOT BE CLAIM ED U/S 35(2AB) OF THE ACT. WE FURTHER, NOTED THAT IN THE CASE BEFORE THE TRIBUNAL IN PCP CHEMICALS PVT LTD., (SUPRA) THE FACTS WERE ENTIRELY DIFFERENT BECAUSE THE UNIT WAS FIRST APPRO VED FROM 01.04.2011 AND FOR THE ASSESSMENT YEAR PRIOR TO 01. 04.2011 THERE WAS NO RECOGNITION / APPROVAL FROM THE COMPET ENT AUTHORITY. THE ASSESSEE HAS FILED AN APPLICATION O N 12.08.2011 ON THAT BASIS THE COMPETENT AUTHORITY HAS GIVEN APP ROVAL WITH RETROSPECTIVE EFFECT FROM 01.04.2011. FROM THE ABO VE, IT IS CLEAR THAT ALTHOUGH THE TRIBUNAL HAS TAKEN A DIFFERENT VI EW IN THE MATTER, BUT IT HAS FOLLOWED THE RATIO LAID DOWN BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CLARIS LIFESCIENC E LTD VS CIT (SUPRA) AND THE HONBLE DELHI HIGH COURT IN THE CAS E OF MARUTHI SUZUKI INDIA LTD., VS. UNION OF INDIA (SUPRA), WHIC H IS EVIDENT FROM THE FACT THAT APPROVAL CANNOT BE TAKEN BACK FR OM THE FINANCIAL YEAR FORM WHICH DATE THE ASSESSEE HAS FIL ED ITS ADVANCE ENZYME TECHNOLOGIES LTD. 12 APPLICATION IN FORM NO. 3CK. IN FACT, THE CASE LAW RELIED UPON BY THE DR IN PCP CHEMICALS PVT LTD., (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE IN AS SUCH THE TRIBUNAL HAS ACCEPTED T HE DECISION GUJARAT HIGH COURT TO THE EFFECT THAT THE APPROVAL SHOULD BE GRANTED FROM THE FIRST DAY OF THE FINANCIAL YEAR IN WHICH THE APPLICATION IS FILED, IRRESPECTIVE OF THE DATE OF T HE ORDER GRANTING SUCH APPROVAL. COMING BACK TO ANOTHER CASE RELIED UPON BY THE LD. DR IN THE CASE OF NIVO CONTROLS LTD. VS. CIT. WE FIND THAT THE TRIBUNAL HAS REJECTED THE CLAIM OF THE ASSESSEE ON ENTIRELY DIFFERENT FACTS WHICH IS EVIDENT FROM THE FACT THAT IN 263 PROCEEDINGS IT HAS UPHELD THE FINDINGS OF THE LD. C IT FOR REJECTION OF DEDUCTION U/S 35(2AB) OF THE ACT, ON T HE GROUND THAT THE ASSESSEE HAS FAILED TO MAINTAIN SEPARATE BOOKS OF ACCOUNT FOR ITS R&D FACILITY ON THE BASIS OF ADMISSION OF A UTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT NO SUCH SEPARAT E BOOKS OF ACCOUNTS WERE MAINTAINED. 17. IN THIS CASE, IT IS UNDISPUTED FACT THAT THE R ECOGNITION WAS VALID FROM 01.04.2001, AND WHICH WAS AVAILABLE DUR ING THIS PERIOD. THE APPLICATION FOR APPROVAL IN FORM 3CK W AS FILED AS BACK AS IN 09.01.2002. THE ASSESSEE HAS CLAIMED DE DUCTION U/S 35(2AB) OF THE ACT, RIGHT FROM A.Y 2001-02 TO A.Y 2 008-09 AND SUCH CLAIM WAS ACCEPTED BY THE DEPARTMENT. FURTHER , THE FACILITY WAS APPROVED / RECOGNIZED UP TO 31.032016, VIDE COMMUNICATION DATED 15.01.2014, AND SUCH APPROVAL W AS ONCE AGAIN RENEWED UP TO 31.03.2019. FROM THE ABOVE, IT IS VERY CLEAR THAT THE ASSESSEE FACILITY WAS APPROVED BY TH E COMPETENT AUTHORITY I.E THE SECRETARY DSIR, BUT THERE WAS NO APPROVAL IN FORM NO. 3CM FOR THE IMPUGNED ASSESSMENT YEAR. THE REFORE, WE ARE OF THE CONSIDERED VIEW THAT FROM THE SETTLED LEGAL POSITION OF THE LAW BY THE VARIOUS CASES OF HIGH COURTS AS D ISCUSSED HERE IN ABOVE IN PRECEDING PARAGRAPHS WHAT IS RELEV ANT TO DECIDE ELIGIBILITY FOR WEIGHTED DEDUCTION U/S 35(2A B) OF THE ACT, IS EXISTENCE OF R&D FACILITY AND RECOGNITION OF SUC H FACILITY BY THE COMPETENT AUTHORITY. ONCE THE FACILITY HAS BEE N APPROVED BY THE COMPETENT AUTHORITY, THEN THERE IS NO CUT OFF D ATE IS PRESCRIBED FOR APPROVAL OF SUCH FACILITY AND THE BE NEFIT OF DEDUCTION U/S 35(2AB) OF THE ACT, SHOULD BE GIVEN T O THE ASSESSEE AS LONG AS THE RECOGNITION IS IN FORCE. H ENCE, WE ARE OF THE CONSIDERED VIEW THAT THE A.O AS WELL AS LD. CIT(A) WERE IN CORRECT IN DENIED THE BENEFIT OF WEIGHTED DEDUCT ION CLAIMED U/S 35(2AB) OF THE. HENCE, WE DIRECT THE A.O TO AL LOW WEIGHTED DEDUCTION CLAIMED U/S 35(2AB) OF THE ACT. 11. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH VIEW TAKEN BY THE CO-ORDINATE BENCH IN ASSESSEE OWN CASE FOR EARLIER YEARS, WE ARE OF THE CONSIDERED VIEW THAT THE LD. AO, AS WELL AS THE LD.CIT(A) WERE ERRED IN DENYING THE BENEFIT OF WEIGHTED DEDUCTIONS CLAIMED U/S 35(2AB) OF THE I.T.ACT, 1961, IN RESPECT OF EXPENDI TURE INCURRED FOR ADVANCE ENZYME TECHNOLOGIES LTD. 13 RESEARCH AND DEVELOPMENT ACTIVITIES IN IN-HOUSE R& D CENTERS, EVEN THOUGH THE R&D FACILITY HAS BEEN RECOGNIZED BY THE COMPETENT AUTHORITY. HENCE, WE DIRECT THE LD. AO TO ALLOW WEI GHTED DEDUCTIONS CLAIMED BY THE ASSESSEE TOWARDS R&D EXPENDITURE U/S 35(2AB) OF THE I.T.ACT, 1961. WE, FURTHER DIRECT THE ASSESSEE TO WITHDRAW ALTERNATE CLAIM MADE U/S 35(1)(I) OF THE INCOME TAX ACT, 1961. 12. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR AY 2011-12 IS ALLOWED AND APPEAL FILED BY THE REVENUE FOR AY 2011 -12 IS DISMISSED. ITA NO.5172/MUM/2017:- 13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS O F APPEAL. 1.1 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEA LS) - 1, NASIK [LD. CIT A)'], ERRED IN CONFIRMING THE ACTION OF THE ASSISTA NT COMMISSIONER OF INCOME TAX, CIRCLE-1, MUMBAI [THE A.O] IN DENYIN G THE EXEMPTION OF RS. 14,97,34,666/- CLAIMED BY THE APPELLANT U/S. 35 (2A B) OF THE INCOME-TAX ACT, 1961. 1.2 IT IS SUBMITTED THAT IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE, AND IN LAW, NO SUCH DENIAL OF EXEMPTION WAS CALLED FOR. 14. THE FACTS AND ISSUES INVOLVED IN THIS APPEAL FI LED BY THE ASSESSEE ARE IDENTICAL TO THE FACTS AND ISSUES, WHI CH WE HAD CONSIDERED IN ITA.NO.866/MUM/2017 FOR AY 2011-12. T HE REASONS GIVEN BY US IN PRECEDING PARAGRAPHS SHALL MUTATIS MUTANDIS APPLY TO THIS APPEAL AS WELL. THEREFORE, FOR SIMILAR REASONS RECORDED IN ITA NO.866/MUM/2017, WE DIRECT THE LD. AO TO ALLOW DEDU CTIONS CLAIMED U/S 35(2AB) OF THE I.T.ACT, 1961, IN RESPECT OF R&D EXPENDITURE. 15. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR AY 2012-13 IS ALLOWED. ADVANCE ENZYME TECHNOLOGIES LTD. 14 16. AS A RESULT, APPEALS FILED BY THE ASSESSEE FOR AYS 2011-12 & 2012-13 ARE ALLOWED AND APPEAL FILED BY THE REVENUE FOR AY 2011-12 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04 /03 /2020 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 04/03/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//