Plazma Technologies Pvt.Ltd, Pune V. Assistant Commissioner of Income-tax, Circle -10, , Pune

ITA 929/PUN/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7244 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2015-2016
• Appeal Filed On: 22-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Competent authority; Set aside
• Section: 250; 201; 20

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 929 /P U N/201 8 / ASSESSMENT YEAR : 20 1 5 - 16 PLAZMA TECHNOLOGIES PVT. LTD., E - 10/19, B - 3, MIDC, BHOSARI, PUNE 411026 PAN : AABCP7293A ....... / APPELLANT / V/S. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 10, PUNE / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : SHRI M.K. VERMA / DATE OF HEARING : 2 2 - 01 - 2019 / DATE OF PRONOUNCEMENT : 18 - 0 4 - 201 9 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 6, PUNE DATED 07 - 03 - 2018 FOR THE ASSESSMENT YEAR 201 5 - 16 . THE SOLITARY ISSUE RAISED IN THE APPEAL IS AGAINST DISALLOWANCE OF ASSESSEES CLAIM OF WEIGHTED DEDUCTION U/S. 35(2AB) O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) . 2 ITA NO . 929/PUN/2018, A.Y. 2015 - 16 2 . THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE COMPANY IS ENGAGED IN MANUFACTURING OF PLASMA CUTTER, ROBOTIC PLASMA CUTTING MACHINE S , PLASMA TROLLEY CUTTING MACHINE S AND PLASMA HAND CUTTING MACHINE S , SWIFT BEAM AND TEMPLATE PROFILER. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 29 - 09 - 2015 DECLARING NIL INCOME. THE ASSESSEE HAD CLAIMED WEIGHTED DEDUCTION OF RS.1,71,01,53 0/ - U/S. 35(2AB) OF THE ACT. IN SCRUTINY ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT FURNISHED NECESSARY SUPPORTING DOCUMENTS VIZ. F ORM 3CM AND FORM 3CL FROM DIRECTORATE OF SCIENTIFIC & INDUSTRIAL RESEARCH (DSIR). THE ASSESSING OFFICER DISALLOWED ASSESSEES CLAIM OF WEIGHTED DEDUCTION AND RESTRICTED THE DEDUCTION TO THE ACTUAL EXPENDITURE I.E. RS.85,50,765/ - U/S. 35(1) OF THE ACT. AGGRIEVED AGAINST THE ASSESSMENT ORDER DATED 18 - 12 - 2017, THE ASSESSEE FILED APPEAL BEFO RE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE ABSENCE OF FORM NO. 3CL FROM DSIR UPHELD THE FINDINGS OF ASSESSING OFFICER AND REJECTED THE ASSESSEES CLAIM OF DEDUCTION U/S. 35(2AB) OF THE ACT . NOW, THE ASSES SEE IS IN APPEAL AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 3. SHRI KISHOR PHADKE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS BEEN CLAIMING WEIGHTED DEDUCTION @ 200% IN THE PAST AND THE SAME WAS ALLOWED TO THE ASSESSEE. THE WEIGHTED DEDUCTION WAS DISALLOWED IN THE ASSESSMENT YEAR UNDER APPEAL MERELY ON THE GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH CERTIFICATE FROM DSIR QUANTIF YING THE DEDUCTION IN THE FORM 3CL. THE LD. AR CONTENDED THAT THE PROVISIONS OF RULE 6(7A) OF THE INCOME TAX RULES, 1962 HAVE BEEN AMENDED W.E.F. 01 - 07 - 2016, THEREFORE, THEY WOULD BE APPLICABLE F ROM THE ASSESSMENT YEAR 3 ITA NO . 929/PUN/2018, A.Y. 2015 - 16 2017 - 18 . IN THE OLD SCHEME T HERE WAS NO REQUIREMENT FOR QUANTIFICATION CERTIFICATE SPECIFYING THE EXPENDITURE INCUR RED ON IN - HOUSE RESEARCH AND DEVELOPMENT FROM DSIR . H ENCE, THE OBJECTION RAISED BY THE ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS) IN DISALLOWING ASSESSEES CLAIM OF DEDUCTION U/S. 35(2AB) IS WRONG. THE LD. AR IN SUPPORT OF HIS CONTENT IONS PLACED RELIANCE ON THE FOLLOWING DECISIONS : I . BANCO PRODUCTS (INDIA) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX REPORTED AS 405 ITR 318 (GUJ.); II . CUMMINS INDIA LIMITED VS. DY. COMMISSIONER OF INCOME TAX IN ITA NO. 309/PUN/2014 FOR ASSESSMENT YEAR 2009 - 10 DECIDED ON 15 - 05 - 2018. 3.1 THE LD. AR POINTED THAT DSIR HAS GRANTED REGISTRATION CERTIFICATE TO THE ASSESSEE ON 29 - 08 - 2013 AND THE SAID CERTIFICATE WAS VALID TILL 31 - 03 - 2016. THE CERTIFICATE ISSUED BY DSIR IS AT PAGE 42 OF PAPER BOOK. THE LD. AR FURTHER POINTED THAT DSIR HAD ISSUED APPROVAL LETTER IN FORM NO. 3CM FOR IN - HOUSE RESEARCH AND DEVELOPMENT FACILITY U/S. 35(2AB). THE SAID APPROVAL LETTER IS AT PAGE 65 O F THE PAPER BOOK. 4. PER CONTRA, SHRI M.K. VERMA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE IMPUGNED ORDER. THE LD. DR SUBMITTED THAT THE CERTIFICATION FROM THE COMPETE AUTHORITY IN FORM 3CL AND 3CM IS MANDATORY REQUIREMENT FOR CLAIMING DEDUCTION U/S. 35(2AB) OF THE ACT. IN THE ABSENCE OF MANDATORY CERTIFICATES THE ASSESSEE CANNOT CLAIM WEIGHTED DEDUCTION IN RESPECT OF R & D EXPENDITURE. TO STRENGTHEN HIS SUBMISSIONS THE LD. DR PLACED RELIANCE ON THE DECISION OF HONBLE MU MBAI BENCH OF TRIBUNAL IN THE CASE OF PCP CHEMICALS (P.) LTD. VS. INCOME TAX OFFICER REPORTED AS 168 ITD 26 (MUMBAI - TRIB.). 4 ITA NO . 929/PUN/2018, A.Y. 2015 - 16 5. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVE OF RIVAL SIDES AND HAVE PERUSED THE DOCUMENTS AVAILABLE ON RECORD. W E HAVE ALSO CONSIDERED THE DECISIONS ON WHICH RESPECTIVE SIDES HAVE PLACED RELIANCE. THE SOLITARY ISSUE IN PRESENT APPEAL IS WHETHER FOR THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE IS REQUIRED TO OBTAIN CERTIFICATE FROM DSIR FOR CLAIMING WEIGHTED DEDUCTION U/S. 35(2AB) OF THE ACT. IN SO FAR AS ASSESSEES EXPENDITURE TOWARDS R & D DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL IS CONCERNED , IT IS NOT DISPUTED. THE ONLY REASON FOR DISALLOWING ASSESSEES CLAIM U/S. 35(2AB) IS THAT THE ASSESSEE HAS FAILED TO FURNISH CERTIFICATE FROM COMPETENT AUTHORITY I.E. DSIR IN THE PRESCRIBED FORM 3CL. 6. RULE 6 (7A) OF THE INCOME TAX RULES, 1962 UNDER WHICH FORM 3CL WAS REQUIRED TO BE FURNISHED WAS AMENDED BY THE INCOME TAX (10 TH ) AMENDMENT RULE, 2016 W.E.F. 01 - 07 - 2016. AFTER THE AMENDMENT A NEW FORM NO. 3CL WAS INTRODUCED. THE NEW FORM NO. 3CL HAD TWO PARTS I.E. PART A REQUIRING THE PRESCRIBED AUTHORITY TO FURNISH DETAILS OF APPROVAL OF IN - HOUSE RESEARCH AND DEVELOPMENT FACIL ITIES AND PART B - WHEREIN THE PRESCRIBED AUTHORITY HAD TO QUANTIFY THE EXPENDITURE INCURRED ON IN - HOUSE RESEARCH AND DEVELOPMENT FACILITIES DURING THE PREVIOUS YEAR AND ELIGIBLE FOR WEIGHTED DEDUCTION U/S. 35(2AB) OF THE ACT. PRIOR TO THE AMENDMENT TO RU LE 6 (7A), THE PRESCRIBED AUTHORITY HAD TO FURNISH REPORT IN FORM NO. 3CL GIVING THE APPROVAL OF IN - HOUSE RESEARCH AND DEVELOPMENT FACILITIES U/S. 35(2AB) IN ORDER TO ENTITLE THE ASSESSEE TO CLAIM WEIGHTED DEDUCTION. T HERE WAS NO REQUIREMENT FOR QUANTIFICA TION OF EXPENDITURE ELIGIBLE FOR WEIGHTED DEDUCTION BY THE PRESCRIBED AUTHORITY. THE ASSESSEE HAS PLACED ON RECORD A CERTIFICATE OF REGISTRATION FROM DSIR DATED 29 - 08 - 2013 AT PAGE 42 OF THE PAPER BOOK. A PERUSAL OF REGISTRATION CERTIFICATE SHOWS THAT THE SAME IS VALID TILL 31 - 03 - 2016. THE ASSESSEE HAS ALSO FURNISHED FORM NO. 3CM 5 ITA NO . 929/PUN/2018, A.Y. 2015 - 16 ISSUED BY DSIR ON 16 - 10 - 2014. A PERUSAL OF FORM NO. 3CM REVEAL THAT IN - HOUSE RESEARCH AND DEVELOPMENT FACILITIES OF THE ASSESSEE IS APPROVED FOR THE PURPOSE OF SECTION 35(2AB) U P TO 31 - 03 - 2016. THE DOCUMENTS PLACED ON RECORD BY THE ASSESSEE CLEARLY REVEAL THAT THE RESEARCH AND DEVELOPMENT FACILITIES OF ASSESSEE ARE DULY REGISTERED WITH THE COMPETENT AUTHORITY AND HENCE, THE ASSESSEE IS ELIGIBLE FOR CLAIMING DEDUCTION U/S. 35(2AB ) OF THE ACT. IN SO FAR AS THE ISSUE OF FURNISHING OF FORM NO. 3CL IS CONCERNED AS POINTED EARLIER RULE 6 (7A) HAS BEEN AMENDED W.E.F. 01 - 07 - 2016 AND HENCE WOULD NOT APPLY RETROSPECTIVELY. 7. THE HONBLE GUJARAT HIGH COURT IN THE CASE OF BANCO PRODUCTS (INDIA) LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (SUPRA) HAS HELD THAT ONCE RESEARCH AND DEVELOPMENT FACILITY IS APPROVED, ENTIRE EXPENDITURE INCURRED ON DEVELOPMENT OF RESEARCH AND DEVELOPMENT FACIL I TY HAS TO BE ALLOWED FOR WEIGHTED DEDUCTION U/S. 35(2AB) OF THE ACT. 8. WE FURTHER FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SUN PHARMACEUTICAL INDUSTRIES LTD. REPORTED AS 250 TAXMAN 270 HAS HELD THAT WHERE THE ASSESSEE HAS BEEN APPROVED BY THE PRESCRIBED A UTHORITY FOR IN - HOUSE RESEARCH AND DEVELOPMENT FACILITY, THE BENEFIT OF DEDUCTION U/S. 35(2AB) OF THE ACT CANNOT BE DENIED TO THE ASSESSEE, MERELY FOR THE REASON THE PRESCRIBED AUTHORITY FAILED TO FURNISH FORM 3CL. 9. THE CO - ORDINATE BENCH OF TRIBUNAL IN THE CASE OF CUMMINS INDIA LIMITED VS. DY. COMMISSIONER OF INCOME TAX (SUPRA) HAD CONSIDERED THE APPLICABILITY OF AMENDMENT BROUGHT IN BY THE INCOME TAX (10 TH ) AMENDMENT RULES RELATING TO THE ISSUANCE OF FORM NO. 3CL. THE TRIBUNAL HELD THAT PRIOR TO THE AM ENDMENT NO SUCH PROCEDURE/METHODOLOGY WAS 6 ITA NO . 929/PUN/2018, A.Y. 2015 - 16 PRESCRIBED FOR CERTIFYING THE AMOUNT OF EXPENDITURE FROM YEAR TO YEAR IN FORM NO. 3CL. HENCE, THE AMENDED PROVISIONS WOULD NOT APPLY TO THE ASSESSMENT YEAR UNDER APPEAL. 10. IN VIEW OF UNDISPUTED FACT OF THE CASE , DOCUMENT ON RECORD AND THE DECISIONS DISCUSSED ABOVE, WE DO NOT SEE ANY REASON TO DENY THE BENEFIT OF DEDUCTION U/S. 35(2AB) TO THE ASSESSEE . ACCORDINGLY, THE IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF ASSESSEE IS ALLOWED. 11 . IN THE RESULT, THE A PPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 18 TH DAY OF APRIL, 2019. SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 18 TH APRIL, 2019. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 6 , PUNE 4. THE PR. COMMISSIONER OF INCOME TAX - 5 , PUNE 5. , , - , / DR, ITAT, SMC BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE