KAISHA LIFESCIENCES PRIVATE LIMITED,MUMBAI V. DEPUTY COMMISSIONR OF INCOME TAX , CIRCLE 3(2)(1), MUMBAI

MA 108/MUM/2025

AI Insights

The case involves Kaisha Lifesciences Pvt. Ltd., the applicant, who filed a Miscellaneous Application under section 254(2) of the Income Tax Act, 1961, seeking rectification of typographical errors in a previous Tribunal order concerning the assessment year 2020-21. The errors pertained to the misnumbering of grounds and the omission of adjudication on a specific ground related to capital expenditure. The Tribunal acknowledged these errors and made the necessary corrections, including the proper acknowledgment of grounds and the deletion of irrelevant paragraphs.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708813 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2020-2021
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: RAHUL SARDA
• Keywords: Opportunity of being heard; Unexplained cash credit; Capital expenditure; Principle of natural justice
• Section: 68; 234B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER MA No.108/MUM/2025 (Arising out of ITA No.4311/MUM/2023) (Assessment Year : 2020–21) Kaisha Lifesciences Pvt. Ltd. 72/73, 7th Floor Plot, 215 Free Pass House, Free Press Journal Marg, Mumbai, Nariman Point, S.O., Mumbai - 400021 PAN- AAOCS5727M ……………. Applicant (Original Appellant) v/s DCIT, Central Circle – 3(2)(1) Aayakar Bhavan, Mumbai - 400020 …………….Respondent (Original Respondent) Assessee by : Shri Rahul Sarda Revenue by : Shri Hemanshu Joshi, Sr. DR Date of Hearing – 04/07/2025 Date of Order – 15/07/2025 O R D E R PER SANDEEP SINGH KARHAIL, J.M. 1. The assessee has filed the present Miscellaneous Application under section 254(2) of the Income Tax Act, 1961 (\"the Act\") seeking rectification of the order dated 24/10/2024 passed by the coordinate bench of the Tribunal in the assessee’s appeal being ITA No. 4311/Mum./2023, for the assessment year 2021-22. MA No.108/MUM/2025 (A.Y. 2020-21) 2 2. During the hearing, the learned Authorised Representative (“learned AR”), at the outset, submitted that the present Miscellaneous Application has been filed by the assessee seeking rectification of the following typographical mistakes: – Sr.No. (1) Mistake Apparent from the Record (2) Request for rectification with supporting reasons, wherever necessary (3) 1 Ground No. 1 (and not Ground No. 2) pertains to addition under section 68 of the Act (Paragraph nos. 3 & 7). The words \"ground no.2\" be Kindly substituted with \"ground no.l\" in Paragraph nos. 3 and 7 of the Order. 2 Ground No. 2 (and not Ground No. 3) pertains to deduction u/s 35(2AB) of the Act (Paragraph no. 8). The words \"ground no.3\" be kindly substituted with \"ground no.2\" in Paragraph no. 8. 3 Omission of result in respect of issue of deduction u/s 35(2AB) (Paragraph no. 15) It has not been mentioned in paragraph no. 15 that Ground No. 2 is allowed. The same may kindly be mentioned. 4 Ground No. 4 (and not Ground No. 3) has been discussed in paragraph no. 16 of the Order (Paragraph no. 16). The words \"ground no.3\" be kindly substituted with \"ground no.4\" in Paragraph no. 16. 5 The observation: \"Ground no.4 raised in assessee's appeal pertains to the levy of interest under section 234A and section 234B of the Act, which is consequential in nature. Therefore, ground no.4 needs no separate adjudication.\" (Paragraph no. 17) Ground No. 4 does not pertain to levy of interest u/s 234A and 234B of the Act. In fact, Ground No. 4 pertaining to double taxation is already adjudicated in paragraph no. 16. Therefore, paragraph no. 17 may be deleted. 6 The observation: \"In view of our aforesaid findings, ground no.1 raised in assessee's appeal has been rendered academic and therefore is left open.\" (Paragraph no. 18) Since Ground No. 1 has been adjudicated in paragraph nos. 3 to 7, the said paragraph no. 18 may kindly be deleted. 7 Non-adjudication of actual Ground No. 3 which reads as follows: \"The NFAC failed to appreciate that the amount of Rs. 5,70,81l/- did not pertain to cost of land or building, and hence, the same could not be disallowed on the ground that the same was in the nature of capital expenditure.\" This ground raised by the Appellant has inadvertently not been adjudicated by the Hon'ble ITAT, and therefore, appropriate orders as the Hon'ble ITAT deems fit may be passed in this regard. 3. Having considered the submissions of both sides and perused the material available on record, we find that in its original appeal memo, the assessee raised the following grounds of appeal along with Form 36: – MA No.108/MUM/2025 (A.Y. 2020-21) 3 “1. GROUND NO. 1 - ASSESSMENT ORDER PASSED WITHOUT PROPER SERVING OF NOTICE AND GRANTING AN OPPORTUNITY OF BEING HEARD: 1.1 The learned AO has erred in passing the assessment order without proper serving of the notice as per the provisions of Rule 127 of the Income-tax Rules, 1962 (Rules) on the new email address of the appellant as was duly communicated in the submission filed before the learned AO. 1.2 However, the learned CIT(A) has failed to appropriately examine the submission made by the appellant and dismissed this ground leading to violation of principles of natural justice. Without prejudice to Ground No.1 above, the appellant submits the following grounds of appeal. GROUND NO. 2 - TREATMENT OF LOAN OBTAINED FROM SHAREHOLDERS AMOUNTING TO RS. 2,30,00,000 AS UNEXPLAINED CASH CREDIT. 2.1 On the facts and in the circumstances of the case and in law, the learned AO and the CIT(A) have erred in treating the loan availed from Mr. Kairus Dadachanji, being a shareholder of the company, as unexplained cash credit as per section 68 of the Act. 2.2 The learned AO and the CIT(A) have erred in making an addition under section 68 in respect of unsecured loans by not considering the fact that the appellant has submitted adequate details to substantiate its source. 2.3 The learned AO and the CIT(A) have erred in not considering the provisions of section 68, as per which the source of source is required to be proved only in case of share application money, share capital, share premium or like amounts and not in case of loan transaction. GROUND NO. 3 - INCORRECT ADDITION AMOUNTING TO Rs.33,74,518 UNDER SECTION 35(2AB) OF THE ACT 3.1 On the facts and in the circumstances of the case and in law, the learned AO and the CIT(A) have erred in restricting the deduction under section 35(2AB) for the period mentioned in order in Form 3CM and not appreciating that as per the Department of Scientific and Industrial Research (DSIR) guidelines approval in Form 3CM to the inhouse R&D centers having valid recognition by DSIR are considered from 1st April of the year in which application is made. 3.2 The learned CIT(A) has passed the order u/s 250 without giving cognizance to the legal submission made by the appellant and has erroneously stated that the appellant has not substantiated the correctness of the claim whereas the appellant submitted extract from the DSIR guidelines and judicial precedent from jurisdictional tribunal in its legal submission to the CIT(A). 3.3 Without prejudice to the above, the learned AO has erroneously computed the amount of deduction to be added back to the computation of income and the CIT(A) has failed to direct the learned AO to recompute the same. MA No.108/MUM/2025 (A.Y. 2020-21) 4 GROUND NO. 4 - INCORRECT LEVY OF INTEREST UNDER SECTION 234A AND 234B OF THE ACT 4.1 On the facts and in the circumstances of the case and in law, consequent to the additions made above, the learned AO has erred in levying interest of Rs.6,65,337 under section 234A of the Act and Rs.66,53,370 under section 234B of the Act.” 4. Vide its application dated 18/04/2024, the assessee filed the revised grounds of appeal as the original grounds of appeal were lengthy and argumentative. We find that these grounds have been reproduced in para-2 of the Tribunal’s order dated 24/10/2024. From the comparative perusal of both grounds of appeal filed by the assessee, i.e. the original grounds of appeal and the revised grounds of appeal, we find that on merits the assessee raised similar issues. However, in the original ground of appeal no. 1, the assessee raised a jurisdictional issue, which was not raised by the assessee in its revised grounds of appeal. Further, in original ground of appeal no. 4, the assessee challenged the levy of interest under sections 234A and 234B of the Act, which was not raised by the assessee in its revised grounds of appeal. Therefore, we find that even though on merits the coordinate bench decided all the issues raised by the assessee on merits, however, due to the fact that the assessee filed more concise grounds vide its revised grounds of appeal, the same resulted in a change in the numbering of the grounds. Thus, resulting in the inadvertent typographical errors as pointed out by the assessee in its Miscellaneous Application. 5. Accordingly, we direct that the words “ground no.2” in para-3 and para- 7 of the Tribunal’s order dated 24/10/2024, dealing with the addition made under section 68 of the Act, be read as “ground no.1”. MA No.108/MUM/2025 (A.Y. 2020-21) 5 6. Similarly, the words “ground no.3” in para-8 of the Tribunal’s order dated 24/10/2024, dealing with deduction claimed under section 35(2AB) of the Act, are directed to be read as “ground no.2”. Further, since the Tribunal in its order dated 24/10/2024 in para-15 held that “the assessee is entitled to claim deduction under section 35(2AB) of the Act even in respect of the expenditure incurred prior to 25/10/2019, i.e. from 01/04/2019, for the year under consideration.”, which is the issue raised by the assessee in revised ground of appeal no.2, we direct that para-15 of the order concludes with the following sentence for completion of findings: - “As a result, ground no.2 raised in assessee’s appeal is allowed.” 7. We find that in grounds no.3 and 4 of its revised grounds of appeal, the assessee has raised different aspects of the disallowance of Rs.5,70,811. Further from the perusal of para-16 of the Tribunal’s order dated 24/10/2024, we find that the coordinate bench restored the issue to the file of the Jurisdictional AO with a direction to allow the claim of deduction under section 35(2AB) of the Act, as per law, in respect of the expenditure incurred from 01/04/2019 after necessary verification of the details of such expenditure. Therefore, in view of the aforesaid findings, we are of the considered view that all the contentions of the assessee as regards the nature and details of expenditure incurred after 01/04/2019 in respect of which deduction under the aforesaid section has been claimed are open. Therefore, we direct that the words “ground no.3” in the last line of para-16 of the Tribunal’s order be read as “grounds no.3 and 4”. MA No.108/MUM/2025 (A.Y. 2020-21) 6 8. Since no ground has been raised by the assessee pertaining to the levy of interest under sections 234A and 234B of the Act vide its revised grounds of appeal, therefore, para-17 in the Tribunal’s order dated 24/10/2024 is no longer required and the same is directed to be omitted. 9. Further, since the original ground of appeal no. 1 pertaining to the jurisdictional issue has not been raised by the assessee vide revised grounds of appeal and revised grounds of appeal no.1 now pertain to the addition made under section 68 of the Act, which has already been adjudicated, therefore, para-18 in the Tribunal’s order dated 24/10/2024 is no longer required. The same is directed to be omitted. 10. In the result, the Miscellaneous Application filed by the assessee is allowed in terms of our aforesaid directions. Order pronounced in the open Court on 15/07/2025 Sd/- OM PRAKASH KANT ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 15/07/2025 Prabhat Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. True Copy By Order Assistant Registrar ITAT, Mumbai "