Orkash Services Pvt. Ltd., Gurgaon V. DCIT, Gurgaon

ITA 5896/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4723 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 18-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GUDRUN NEHAR
• Assessee Lawyers: ASHISH SONAL
• Keywords: Rectification of order; Opportunity of being heard; Principle of natural justice; Additional evidence; Procedural lapse; Competent authority
• Section: 143(3); 154

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH E , NEW DELHI BEFORE : SHRI I.C. SUDHIR , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 5896/DEL./2016 ASSESSMENT YEAR: 2012 - 13 ORKASH SERVICES PVT. LTD., C/O ASHISH SONAL, 01, BIRCH COUNT, NIRVANA COUNTRY, SOUTH CITY - 2, GURGAON. PAN AAACO8966A (APPELLANT) VS. D.C.I.T., CIRCLE 3, GURGAON. (RESPONDENT) APPELLANT BY SH. ASHISH SONAL, A.R. RESPONDENT BY MS. GUDRUN NEHAR, SR. DR ORDER PER L.P. SAHU, A.M.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - I, GURGAON DATED 06.09.2016 FOR THE ASSESSMENT YEAR 2012 - 13 ON THE FOLLOWING GROUNDS : 1. THIS APPEAL TO THE INCOME TAX APPELLATE TRIBUNAL PERTAINS TO DISALLOWANCE TO THIS COMPANY OF THE BENEFIT OF 200% DEDUCTION OF THE R&D EXPENDITURE UNDER SECTION 35 SUBSECTION 2AB OF INCOME TAX ACT, 1961. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIO NER OF INCOME - TAX (APPEALS), GURGAON, ERRED IN DISMISSING OUR SUBJECT APPEAL (APPEAL NO. 236/15 - 16 FOR AY 2012 - 13) MERELY ON TECHNICAL GROUNDS WITHOUT EVALUATING THE FACTS ON RECORD OR THE ISSUE THAT WAS SUBJECT MATTER OF OUR APPEAL AGAINST THE ORDERS OF T HE ASSESSING OFFICER (AO) BY STATING IN HIS ORDER THAT DATE OF HEARING 02.08.2017 DATE OF PRONOUNCEMENT 31 .08.2017 ITA NO. 5896/DEL./2016 2 'THE ISSUE WHETHER THE APPELLANT WAS ELIGIBLE FOR DEDUCTION U/S 35(1)2AB OR NOT WAS DECIDED BY THE A.O. DURING THE PROCEEDINGS U/S 143(3) AND AS SUCH THIS ISSUE CAN BE CONSIDERED IN APPELLATE PROCEEDINGS FOR APPEAL FILED AGAINST ORDER U/S 143(3) ONLY. THIS ISSUE CANNOT BE CONSIDERED IN THE PRESENT APPEAL. THE APPEAL FILED BY THE APPELLANT IS ACCORDINGLY DISMISSED. ' NOTE: OUR APPEAL HAD BEEN FILED U/S 154 AS THE INITIAL ORDER OF THE AO U/S 143( 3) HAD BEEN AMENDED SUBSEQUENTLY BY A REVISED ORDER U/S 154. 2. AT THE OUTSET, IT IS HUMBLY PUT ON RECORD THAT THERE IS NO DISPUTE TO THE FACT THAT EXPENDITURE OF RS. 1,29,58,182/ - WAS INCURRED BY THIS COMPANY TOWARDS ITS DSIR (DEPARTMENT OF SCIENTIFIC & INDUSTRIAL RESEARCH, MINISTRY OF SCIENCE & TECHNOLOGY) RECOGNIZED R&D FACILITY AS THE ASSESSING OFFICER (AO) HAS ALLOWED 100% OF THE SAID AMOUNT AS DEDUCTION VIS HIS ORDER ISSUED U/S 154, THAT MODIFIES THE AO'S INITIAL ASSESSMENT ORDER ISSUED U/S 143(3). THE ONLY REASON FOR WHICH AO HAD DISALLOWED CLAIM OF WEIGHTED DEDUCTION OF 200% OF THE R&D EXPENDITURE IS THAT THERE WAS NO APPROVAL IN FORM 3CM FROM DSIR, MINISTRY OF SCIENCE & TECHNOLOGY AT THE TIME OF PASSING THE SAID ASSESSMENT ORDERS U/S 143(3) AND T HE LATER REVISED ORDER U/S 154. 3. IT IS ALSO HUMBLY PUT ON RECORD THAT OUR R&D FACILITY HAS BEEN APPROVED AS AN IN - HOUSE R&D FACILITY BY THE COMPETENT AUTHORITY, THE DSIR, FOR THE SAID ASSESSMENT YEAR 2012 - 13, FROM 01.04. 2011 ONWARDS AND THE APPROVAL HAS BEEN FURTHER EXTENDED TILL 31.3.2017. (COPIES OF CERTIFICATES FOR R&D APPROVAL AND RENEWAL ARE ATTACHED). 4. WE RECEIVED THE APPROVAL IN FORM 3CM U/S 35(2AB) OF IT ACT FOR OUR R&D FACILITIES VIDE DSIR, MINISTRY OF SCIENCE & TECHNOLOGY LETTER NO. TU/ IV - 15 (1372V2016 DATE 21 JULY 2016, DURING THE PENDENCY OF OUR SAID APPEAL WITH THE CIT (APPEALS), GURGAON. THIS APPROVAL CAME AFTER A DELAY OF OVER FOUR YEARS FROM OUR INITIAL APPLICATION SUBSEQUENT TO THE RECOGNITION BY DSIR OF OUR FACILITY AS AN APPROVE D R&D UNIT. (A COPY OF APPROVAL IN THE FORM 3CM IS ATTACHED). 5. THE SAID APPROVAL FOR OUR R&D FACILITY IN FORM 3CM U/S 35 (2AB) LAYS DOWN A CUT - OFF DATE FROM 01.04.2015 TO 31.03.2017. THIS IS DESPITE THE FACT THAT WE APPLIED FOR AND CONSEQUENTLY RECEIV ED APPROVAL FOR OUR R&D FACILITY AS AN IN - HOUSE R&D FACILITY FROM DSIR FROM THE FY 2011 - 12 (AY 2012 - 13) AND RENEWED TILL 31.03.2017. THE DELAY IN APPROVAL IN FORM 3CM ITA NO. 5896/DEL./2016 3 IS PURELY DUE TO SPECIAL CIRCUMSTANCES OF OUR CASES WHEREIN OUR APPLICATION FOR SANCTION U/S 35 (2AB) REMAINED PENDING FOR OVER FOUR YEARS WITH DSIR, DESPITE OUR R&D UNIT BEING DULY RECOGNISED BY DSIR, AS THE DSIR DID NOT HAVE ANY PRECEDENCE OF SANCTIONING BENEFIT U/S 35 (2AB) TO ANY SOFTWARE R&D FACILITY DUE TO A POLICY AMBIGUITY (DSIR'S REPL Y TO OUR RTI APPLICATION (RIGHT TO INFORMATION ACT) DT 06 APR 2015 REFERS; COPY ATTACHED). THIS WAS DUE TO THE AMBIGUITY ARISING FROM THE FACT THAT SOFTWARE PRODUCTS CAN BE CONSIDERED A SERVICE AS WELL AS A MANUFACTURED PRODUCT IN ITS DIFFERENT FORMS. OUR ATTEMPTS TO GET THIS 'POLIC Y' AMBIGUITY RESOLVED WITH THE MINISTRY OF SCIENCE & TECHNOLOGY TOOK EXTENSIVE EFFORTS OVER A PROLONGED PERIOD OF FOUR YEARS. THIS INVOLVED MULTIPLE RESUBMISSIONS OF OUR APPLICATION TO DSIR FOR APPROVAL U/S 35(2AB), 'RIGHT TO INF ORMATION' (RTI) REQUESTS, AND POLICY LEVEL INTERVENTION WITH THE DSIR AND THE MINISTRY OF SCIENCE & TECHNOLOGY UNDER PRIME MINISTER MODI'S 'MAKE IN INDIA INITIATIVE'. WE ARE THUS THE FIRST INSTANCE IN THE COUNTRY OF A SOFTWARE COMPANY, THAT TOO A SMALL SCA LE COMPANY (MSME), THAT HAS BEEN GIVEN APPROVAL U/S 35 (2AB) IN FORM 3CM FOR ITS R&D FACILITY. PRAYER 1 - 6. BASED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LAW AND THE CASE LAW, WE APPEAL THAT THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), GURGAON, ERRED IN DISMISSING OUR SUBJECT APPEAL MERELY ON TECHNICAL GROUNDS WITHOUT FULLY EVALUATING TH E FACTS ON RECORD PERTAINING TO THE CIRCUMSTANCES OF OUR CASE OR THE ISSUE THAT WAS THE SUBJECT MATTER OF OUR APPEAL I.E. THE ELIGIBILITY FOR WEIGHTED DEDUCTION OF THE EXPENSES OF OUR R&D FACILITY U/S 35(1)2AB. WE HUMBLY WISH TO POINT OUT THAT THE APPEAL F ILED BY US U/S 154 INSTEAD OF U/S 143(3) IS A CURABLE DEFECT, WHICH IN NO WAY ALTERS THE FACTS ON RECORD OR THE MERIT OF OUR APPEAL. AS SUCH, THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), GURGAON SHOULD HAVE TAKEN THIS DEFECT ON RECORD AS A MISTAKE AP PARENT FROM THE RECORDS' AND PASSED ORDERS ON OUR APPEAL BASED ON THE FACT THAT HE TOOK THE CHANGED CIRCUMSTANCE AND ADDITIONAL EVIDENCE ON RECORD PERTAINING TO THE APPROVAL OUR R&D FACILITY IN FORM 3CM BY DSIR U/S 35(1)2AB DURING THE PERIOD OF PENDENCY OF OUR APPEAL WITH HIM. A LETTER FOR RECTIFICATION OF MISTAKE ( F ILED ON 13 SEP 2016 BY HAND WITHIN ONE WEEK OF THE FIRST AND ONLY HEARING OF OUR APPEAL) AND A FRESH MEMO OF APPEAL WAS FILED BY US FOLLOWING THE HEARING OF OUR APPEAL AND RECTIFYING THIS MISTAK E REGARDING APPLICABILITY OF SECTION 143(3) VS SECTION 154. HOWEVER, THESE WERE NOT TAKEN ON RECORD BY THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), GURGAON IN HIS JUDGEMENT ORDER. WE UNDERSTAND THAT IT IS SO BECAUSE THE ITA NO. 5896/DEL./2016 4 FRESH APPEAL MEMO MAY HAVE BEEN RECEIVED IN HIS OFFICE AFTER HE HAD PASSED THE ORDER ON OUR APPEAL. FOR OUR PRAYER, WE WISH TO DRAW UPON THE FOLLOWING CASE LAW WHEREIN IT IS A SETTLED MATTER OF LAW THAT A CURABLE MISTAKE THAT IS NOT MALA FIDE IN INTENT, AND DOES NOT CHANGE THE FACTS OR CIRCUMSTANCES OF THE CASE SHOULD BE DEALT WITH LIBERALLY. A) IN REMFRY & SONS VS. CIT [2005] 276 ITR 1 (DEL) THE HIGH COURT HELD THAT: .....PROCEDURAL DEFECTS WHICH DO NOT GO TO THE ROOT OF THE MATTER SHOULD NOT BE PERMITTED TO DEFEAT A JUST CAUSE. THERE IS SUFFICIENT POWER IN THE COURTS, UNDER THE CODE OF CIVIL PROCEDURE, TO ENSURE THAT INJUSTICE IS NOT DONE TO ANY PARTY WHO HAS ADJUST CASE. AS FAR AS POSSIBLE A SUBSTANTIVE RIGHT SHOULD NOT BE ALLOWED TO BE DEFEATED ON ACCOUNT OF A PROCEDURAL IRREGULARITY WHICH IS CURABLE. THE COURT IN IBID CASE QUOTING OTHER CASE LAW FURTHER STATES: ..... TECHNICALITIES OF LAW SHOULD NOT BE PERMITTED TO HAMPER THE COURTS IN THE ADMINISTRATION OF JUSTICE BETWEEN THE PARTIES. AMENDMENTS ARE ALLOWED IN THE PLEA DINGS TO AVOID UNCALLED FOR MULTIPLICITY OF LITIGATION. A) THE BOMBAY HIGH COURT IN MALANI TRADING CO. VS. CIT (2001) 252 ITR 670 (BOM) HAVE HELD THAT MERELY BECAUSE THERE IS DEFECT IN THE MEMO OF APPEAL, DISMISSAL OF APPEAL WITHOUT GIVING OPPORTUNITY T O CURE SAID DEFECT WILL BE IMPROPER. B) THE SUPREME COURT IN CIT VS. CALCUTTA DISCOUNT CO. LTD., (1973) 91 ITR 8 (SC) OBSERVED THAT IN CONSIDERING AN APPEAL THE APPELLATE AUTHORITY SHOULD DEAL WITH THE SUBSTANCE OF THE MATTER AT ISSUE AND NOT BE UNDULY INFLUENCED BY MERE PROCEDURAL TECHNICALITIES, FOR EXAMPLE, WHETHER THE MEMO OF APPEAL WAS OR WAS NOT IN PROPER FORM ETC. C) IN A CASE INVOLVING MISTAKE IN APPEAL MEMO IN FORM 35, THE JUDGEMENT IN CASE OF CAIRN ENERGY INDIA WEST B.V., ... VS ASSESSEE (IT A NO.86/AHD/2010) REFERS, WHEREIN THE APPELLATE TRIBUNAL IN ITS ITA NO. 5896/DEL./2016 5 ORDER HAS STATED THAT 'THE DEFECT IN FILING THE APPEAL IS A CURABLE DEFECT AND IN VIEW OF THE PROVISIONS OF SECTION 292B OF THE I.T, ACT, 1961, NO PROCEEDINGS SHALL BE DEEMED TO BE INVALID MER ELY BY REASON OF ANY MISTAKE, DEFECT OR OMISSION IN THE SAME, IF SUCH PROCEEDING IS IN SUBSTANCE AND IN EFFECT IN CONFORMITY WITH OR ACCORDING TO THE INTENT AND PURPOSE OF THE ACT. PRAYER 2: 7 . BASED ON THE SANCTION FROM DSIR IN FORM 3CM U/S 35(AB) FOR THE PERIOD 01.04.2015 TO 31.03.2017 THAT HAS BEEN RECEIVED BY US, VARIOUS FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LAW AND THE CASE LAW, WE APPEAL THAT WE ARE ENTITLED TO THE CLAIM OF WEIGH TED DEDUCTION OF 200% OF THE R&D EXPENDITURE INCURRED BY US DURING THE ENTIRE PERIOD, BEGINNING AY 2012 - 13, FOR WHICH WE HAVE HAD THE RECOGNITION AND APPROVAL OF DSIR FOR OUR IN - HOUSE R&D FACILITY. EACH OF THE YEAR, BEGINNING AY 2012 - 13, OUR DULY RECOGNIZE D R&D FACILITY HAS BEEN AUDITED, AUDIT REPORTS SUBMITTED TO DSIR AND WE HAVE THROUGHOUT FULFILLED ALL THE ELIGIBILITY CRITERIA FOR APPROVAL U/S 35(2AB) TO DSIR, MINISTRY OF SCIENCE & TECHNOLOGY AS PER THE LAID DOWN GUIDELINES AND RULES. 8. AS AN INNOVATIO N AND R&D FOCUSED SMALL - SCALE ENTERPRISE (MSME) THAT IS DEVELOPING INDIGENOUS HI - TECHNOLOGY SOLUTIONS IN FURTHERANCE OF INDIA'S NATIONAL SECURITY FOR COUNTER TERRORISM, INTERNAL SECURITY, DEFENCE AND INTELLIGENCE AGENCIES, A GREAT INJUSTICE HAS BEEN DONE I N DENYING THE BENEFITS OF 200% WEIGHTED DEDUCTION OF EXPENDITURE OF OUR DSIR RECOGNIZED R&D FACILITY. WE THEREFORE PRAY FOR RELIEF AND IN SUPPORT OF OUR APPEAL DRAW YOUR KIND ATTENTION TO THE BELOW MENTIONED CASE LAW WHEREIN IT A SETTLED MATTER OF LAW THAT ONCE SANCTION U/S 35 (2AB) IS GRANTED, THE BENEFIT OF WEIGHTED DEDUCTION ON IN - HOUSE RESEARCH AND DEVELOPMENT EXPENDITURE IS ALLOWED FROM THE YEAR IN WHICH THE R&D FACILITY HAS BEEN INITIALLY RECOGNIZED BY DSIR AS AN IN - HOUSE R&D FACILITY. THE ACT NOWHERE SUGGESTS OR IMPLIES THAT THE CUT - OFF DATE MENTIONED IN THE 3CM CERTIFICATE ISSUED BY THE DSIR WILL BE THE CUT - OFF DATE FOR ELIGIBILITY OF WEIGHTED DEDUCTION ON THE R&D EXPENDITURE INCURRED. WE PRODUCE THE FOLLOWING CASE LAW IN THE SUPPORT OF OUR PRAYER: CIT V. CLARIS LIFESCIENCES LTD. [2010] 326ITR 251 (GUJARAT HIGH COURT) CIT V. SANDAN VIKAS (INDIA) LTD. (ITA NO. 348 OF 2011) (DELHI HIGH COURT) ITA NO. 5896/DEL./2016 6 ACIT V. MECO INSTRUMENTS PVT. LTD. [2010 - TIOL - 563 - IT] (IT APPELLATE TRIBUNAL, MUMBAI] SRI BIOTECH V. A SST. CIT (ITA NO. 385 OF 2014 (IT APPELLATE TRIBUNAL, HYDERABAD) NOTE: AN EXPLANATORY NOTE ON THE ABOVE CASE LAW IS ATTACHED AS ANNEXURE. 9 . IN VIEW OF THE ABOVE, IT IS REQUESTED THAT THE ABOVE REFERRED AO ORDER U/S 143(3) DT.17.03.2015 AS AMENDED BY OR DER U/S 154 DT 16.07.2015 AND NOTICE OF DEMAND NO 1580 DT 20.07.2015 U/S 156 OF THE IT ACT 1961 FOR THE ASSESSMENT YEAR 2012 - 2013 BE QUASHED ON MERIT BEING WRONG AND BAD IN LAW, AND THE BENEFIT OF 200% WEIGHTED DEDUCTION OF EXPENDITURE FOR OUR DSIR RECOGNI ZED R&D FACILITY U/S 35 (2AB) OF THE IT ACT BE RESTORED TO US . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME DECLARING A LOSS OF RS.45,14,305/ - . THE ASSESSMENT U/S. 143(3) OF THE ACT WAS COMPLETED ON 17.03.2015 AT AN INCOME OF RS.2,14,02,059/ - , THEREBY DISALLOWING THE DEDUCTION U/S. 35 ( 2AB ) OF RS.2,59,16,364/ - REPRESENTING TO 200% OF THE EXPENDITURE INCURRED ON R & D, AS CLAIMED BY THE ASSESSEE. THE ASSESSEE FILED APPLICATION U/S. 154 BEFORE THE AO, ON WHICH THE AO RESTRICTED THE DISALLOWANCE TO RS.1,29,58,182/ - REPRESENTING TO 100% OF THE EXPENDITURE INCURRED ON R & D ON THE PREMISE THAT THE EXPENSES TO THE TUNE OF RS.1,29,58,182/ - STOOD ALREADY DISALLOWED BY ASSESSEE ITSELF FOR CLAIMING THE WEIGHTED DEDUCTION UNDER SECTION 3 5 ( 2AB ) . THE APPELLANT PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AGAINST THE ORDER U/S. 154, WHICH WAS DISMISSED BY THE FIRST APPELLATE AUTHORITY OBSERVING AS UNDER : ITA NO. 5896/DEL./2016 7 3.3 I HAVE CAREFULLY CONSIDERED THE APPELLANT'S SUBMISSIONS. THE APPEAL FILED BY THE BY T HE APPELLANT AS PER FORM 35 IS AGAINST ORDER U/S 154 DATED 06.07.2015 AND NOT AGAINST THE ORDER U/S 143(3) DATED 17.03.2015. THE LIMITED ISSUE FOR CONSIDERATION BEFORE THE A.O IN THE PROCEEDINGS U/S 154 WAS A COMPUTATION ERROR IN AS MUCH AS THERE WAS A DOU BLE DISALLOWANCE OF RS. 1,29,58,182/ - , ONCE BY THE APPELLANT HIMSELF AND ONCE AGAIN BY THE A.O. THIS MISTAKE WAS DULY CORRECTED BY THE A.O VIDE ORDER U/S 154. THERE WAS THUS NO MISTAKE IN THE ORDER U/S 154 WHICH REQUIRE ANY INTERVENTION AT THIS STAGE. THE ISSUE WHETHER THE APPELLANT WAS ELIGIBLE FOR DEDUCTION U/S 35(1 )2AB OR NOT WAS DECIDED BY THE A.O DURING THE PROCEEDINGS U/S 143(3) AND AS SUCH THIS ISSUE CAN BE CONSIDERED IN APPELLATE PROCEEDINGS FOR APPEAL FILED AGAINST ORDER U/S 143(3) ONLY. THIS ISSU E CANNOT BE CONSIDERED IN THE PRESENT APPEAL. THE APPEAL FILED BY THE APPELLANT IS ACCORDINGLY DISMISSED. 3. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED ON THE GROUNDS RAISED IN THE MEMO OF THIS APPEAL. HE ALSO SUBMITTED A WRITTEN REPLY , THE MAJOR PART OF WHICH IS A COPY OF ARGUMENTATIVE GROUNDS RAISED IN THIS APPEAL, AS REPRODUCED ABOVE. THE LD. AR OF THE ASSESSEE , GIVING FOLLOWING DATE - WISE EVENTS OF ITS CASE, FURTHER SUBMITTED AS UNDER : 17.03.2015. ASSESSMENT ORDER IS SUED BY THE AO U/S 143 (3) 16.07.2015. AO ISSUES A REVISED ASSESSMENT ORDER U/S 154, CONSEQUENT TO OUR PETITION HIGHLIGHTING MISTAKES APPARENT FROM RECORDS IN THE ORIGINAL ASSESSMENT ORDER. 05/09/2015. THE FIRST HEARING WAS FIXED ON THIS DATE BEFORE HON. COMMISSIONER OF INCOME TAX (APPEALS - 1), GURGAON. THE MATTER WAS EXPLAINED WITH WRITTEN SUBMISSION AND IN BRIEF CIT (A) POINTED OUT THE TECHNICAL DEFECT IN APPEAL WITH RESPECT TO FILING OF APPEAL U/S 154 INSTEAD OF U/S 143(3). THE APPEAL FILED BY US (THE A SSESS E E) U/S 154 INSTEAD OF U/S 143(3) ITA NO. 5896/DEL./2016 8 IS A CURABLE DEFECT, WHICH IN NO WAY ALTERS THE FACTS ON RECORD OR THE MERIT OF APPEAL. AS THIS DEFECT CAN BE CURED WE REQUESTED CIT(A) TO PROVIDE US SHORT TIME TO RECTIFY THE DEFECT BY FILLING RECTIFICATION. THIS WAS PURELY A TECHNICAL DEFECT. THE CONCURRENCE TO RECTIFY WAS BROUGHT ON RECORD BY SIGNING THE ORDER SHEET BY CIT(A) AND US. 06/09/2015 WITHIN A SPAN OF 24 HOURS, CIT(A) ON INSIGNIFICANT TECHNICAL REASON DISMISSED THE APPEAL BY A BLANKET (12 - LINE) ORDER U/S 250(6) OF INCOME TAX ACT 1961. EVEN AFTER CONSENTING TO RECTIFY THE MISTAKE DURING THE HEARING THE PREVIOUS DAY, THE CIT(A) REVOKED FOR THE REASON BEST KNOWN. SUCH A DEJECTED ACT BY CIT(A): REVENUE MINDED DECISION, EVEN THOUGH THE SANCTION U/S 35 (2AB) IS TAKEN ON RECORD BY THE CIT(A) AS WELL AS THE ASSOCIATED CASE LAW, HE FAILS TO PASS A JUDGEMENT ON THIS CORE ISSUE OF OUR APPEAL THAT WAS IN FRONT TO HIM . FOR NOT PROVIDING APPROPRIATE OPPORTUNITY TO RECTIFY THE MISTAKE APPARENT FROM RECORD REVOKING THE COMMITMENT TO FILE THE RECTIFICATION ACTING AS ONE ABOVE THE LAW OF NATURAL JUSTICE AND BY OWN ACCORD IGNORING TO DEAL WITH THE CORE MATTER . GETTING UNDULY INFLUENCED BY MERE PROCEDURAL TECHNICALITIES OF DEFECT AND REJECTING THE APPEAL . 13/09/2015 . THE ASSESS E E SUBMIT ED A LETTER TO CIT(A) FOR RECTIFICATION OF MISTAKE. 21/09/2015 . WE FILE AN AMENDED MEMO OF APPEAL RECTIFYING THE MISTAKE REGARDING APPLICABILITY OF SECTION 143(3) VS SECTION 154 23/09/2015 THE ORDER OF THE CIT(A), GURGAON, ON OUR APPEAL IS RECEIVED AT OUR OFFICE. IT BEARS THE ORDER DATE AS 06.09.2015 AND DISPATCH DATE AS 20.09.2015. WHILE THE ORDER ON THE APPEAL IS PASSED SO HURRIEDLY THE VERY NEXT DAY OF THE HEARING, WHY WAS THE ORDER DISPA TCHED AFTER TWO WEEKS. THIS IS INJUDICIOUS ON PART OF ITA NO. 5896/DEL./2016 9 CIT(A). THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS), GURGAON SHOULD HAVE HAD THE DEFECT REGARDING THE APPLICABILITY OF SEC 143(3) VS 154 TAKEN AS 'A MISTAKE APPARENT FROM THE RECORDS AND PASSED OR DERS ON OUR APPEAL SINCE HE TOOK THE CHANGED CIRCUMSTANCE AND ADDITIONAL EVIDENCE ON RECORD PERTAINING TO THE APPROVAL OUR R&D FACILITY IN FORM 3CM BY DSIR U/S 35 (2AB) DURING THE PERIOD OF PENDENCY OF OUR APPEAL WITH HIM. IT IS PERTINENT TO NOTE THE C I T(A) HAS NOT CONTESTED TO THE SUBSTANCE OF THE MATTER THAT IS ALLOWANCE U/S 35 (2AB), IT IS STRONGLY ASSUMED THAT HE WAS CONVINCED WITH THE MERIT OF THE CASE. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A). 5. WE HAVE CONSIDERE D THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD AND WE FIND CONSIDERABLE SUBSTANCE IN THE CONTENTIONS OF THE ASSESSEE THAT ON THE FIRST DATE OF HEARING, WHEN THE MATTER WAS EXPLAINED BEFORE THE LD. CIT(A), THE LD. CIT( A) POINTED OUT THE TECHNICAL DEFECT IN APPEAL WITH RESPECT TO FILING OF APPEAL AGAINST THE ORDER U/S 154 INSTEAD OF ORDER U/S 143(3). TH IS TECHNICAL DEFECT WAS A CURABLE DEFECT, WHICH DOES NOT GO TO ALTER THE CORE ISSUE INVOLVED IN THIS APPEAL AS OBSERVED IN VARIOUS JUDICIAL PRONOUNCEMENTS RELIED BY THE ASSESSEE. AS PER ASSESSEE, THE ORDER SHEET NOTED ON THE DATE OF HEARING OF FIRST APPEAL, I.E., 05.09.2015 , DULY SIGNED BY ASSESSEE , SHOWS THE CONCURRENCE TO DECIDE THE APPEAL AFTER GETTING THE TECHNICAL DEFE CT RECTIFIED BY THE ASSESSEE. HOWEVER, THE RECORD SHOWS THAT THE APPEAL WAS DISPOSED OF THE VERY NEXT DAY, I.E., 06.09.2015 WITHOUT GIVING ITA NO. 5896/DEL./2016 10 ANY OPPORTUNITY TO RECTIFY THE TECHNICAL DEFECT BY FILING THE REVISED FORM NO. 35, THEREBY REVOKING THE ALLEGED CONCU RRENCE THEREFOR. NO CONTRARY MATERIAL IS PLACED ON RECORD ON BEHALF OF THE REVENUE. SUCH AN ACT OF THE LD. CIT(A), IN OUR OPINION, IS NOT APPRECIABLE UNDER LAW. 6. THE CONTENTION OF THE LD. AR HAS FURTHER BEEN THAT THE APPELLANT WAS IN RECEIPT OF APPROVAL IN FORM 3CM U/S. 35(2AB) OF THE IT ACT ISSUED BY DSIR, MINISTRY OF SCIENCE & TECHNOLOGY VIDE LETTER NO. TU/IV - 15 (1372)/2016 DATED 21.07.2016 DURING THE PENDENCY OF APPEAL WITH LD. CIT(A). THIS APPROVAL LAYS DOWN A CUT - OFF DATE FROM 01.04.2015 TO 31.03.20 17. THE CONTENTION OF THE ASSESSEE IS THAT THIS IS DESPITE THE FACT THAT THE ASSESSEE APPLIED FOR AND RECEIVED APPROVAL FOR THEIR R&D FACILITY AS AN IN - HOUSE R& D FACILITY FROM DSIR FROM THE F.Y. 2011 - 12 AND RENEWED TILL 31.03.2017. HOWEVER, SINCE THE ISSU E BASED ON THIS APPROVAL FROM DSIR, HAS NOT BEEN ADDRESSED BY THE LD. CIT(A) ON MERITS IN THE IMPUGNED ORDER, WHICH HAS BEEN PASSED ON TECHNICAL ASPECT OF THE CASE, WE DEEM IT EXPEDIENT IN THE INTEREST OF JUSTICE TO REMIT THE CASE BACK TO THE FILE OF LD. C IT(A) TO DECIDE THE APPEAL AFRESH ON MERIT OF THE CORE ISSUE , I.E., DISALLOWANCE U/S. 35(2A B ) AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE IS DIRECTED TO SUBMIT THE SUBJECT APPROVAL OF DSIR ALONG WITH ALL THE MATERIAL/DOCUMENTARY EVIDENCES, WHICH HE DEEMS ITA NO. 5896/DEL./2016 11 FIT TO PRODUCE BEFORE THE FIRST APPELLATE AUTHORITY FOR EXAMINATION AND DECISION . ACCORDINGLY, THE APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.08.2017 . SD/ - SD/ - ( I.C. SUDHIR ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.08.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI