Deputy Commissioner of Income Tax, Circle-5(1)(2), Bengaluru V. M/s Park Control and Communications Pvt Ltd, Bengaluru

MA 16/BANG/2020

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 6397 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 01-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 30-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Section: 254(2); 13

Judgement Text

MP NO.16/BANG/2020 M/S. PARK CONTROLS AND COMMUNICATIONS PVT. LTD., BA NGALORE IN THE INCOME TAX APPELLATE TRIBUNAL BBENCH: BANGALORE BEFORE SHRI B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER M.P. NO.16/BANG/2020 (ARISING OUT OF ITA NO.17/BANG/2018) ASSESSMENT YEAR: 2012 13 DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-5(1)(2) BANGALORE PAN NO : AAACP8906B VS. M/S. PARK CONTROLS AND COMMUNICATIONS PVT. LTD. NO.22, 80FT. ROAD HAL 2 ND STAGE BENGALURU-560 075. APPELLANT RESPONDENT APPELLANT BY : SHRI PRIYADARSHI MISHRA, D.R. RESPONDENT BY : SHRI NARENDRA SHARMA, A.R. DATE OF HEARING : 29.01.2021 DATE OF PRONOUNCEMENT : 01.02.2021 O R D E R PER B.R. BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED THIS MISCELLANEOUS APPLICATI ON SUBMITTING THAT THERE IS MISTAKE APPARENT FROM RECO RD IN THE ORDER DATED 12.9.2019 PASSED IN ITA NO.17/BANG/2018 RELATING TO ASSESSMENT YEAR 2013-14 . 2. THE LD. D.R. SUBMITTED THAT THE TRIBUNAL, IN THE ABOVE SAID APPEAL, HAS DECIDED THE ISSUE OF ELIGIBI LITY OF THE ASSESSEE TO CLAIM WEIGHTED DEDUCTION @ 200% U/S MP NO.16/BANG/2020 M/S. PARK CONTROLS AND COMMUNICATIONS PVT. LTD., BA NGALORE PAGE 2 OF 7 35(2AB) OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR S HORT]. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 35(2AB) OF T HE ACT TO THE TUNE OF RS.51.03 LAKHS, BEING 200% OF TH E EXPENDITURE INCURRED ON RESEARCH & DEVELOPMENT OF RS.25.51 LAKHS. HOWEVER, FORM 3CL ISSUED BY DSIR, NEW DELHI TO THE ASSESSEE, THE AO NOTICED THAT AN AMOUN T OF RS.2,63,000/- ONLY WAS MENTIONED THEREIN AND HENCE THE A.O. RESTRICTED THE DEDUCTION TO 200% OF RS.2.63 LA KHS REFERRED ABOVE I.E. TO THE EXTENT OF RS.5.26 LAKHS. HOWEVER, THE TRIBUNAL ALLOWED THE CLAIM OF THE ASSE SSEE FOR DEDUCTION OF RS.51.03 LAKHS BY FOLLOWING THE DE CISION RENDERED BY THE COORDINATE BENCH IN THE CASE OF MAH INDRA ELECTRIC MOBILITY LTD. (ITA NO.641/BANG/2017 DATED 14.9.2018), WHEREIN IT WAS HELD THAT, PRIOR TO 1.7. 2016, FORM NO.3CL HAD NO LEGAL SANCTITY, I.E., IT WAS HEL D BYTHE CO-ORDINATE BENCH THAT ONLY W.E.F. 1.7.2006, IN VIE W OF THE AMENDMENT MADE TO RULE 6(7A)(B) OF THE INCOME TAX RULES, THE QUANTIFICATION OF WEIGHTED DEDUCTION ALL OWABLE U/S 35 (2AB) OF THE ACT HAS TO BE BASED ON FORM NO. 3CL. 3. THE LD. D.R. SUBMITTED THAT THE TRIBUNAL DID NOT CONSIDER THE DECISION RENDERED BY HONBLE JURISDICT IONAL KARNATAKA HIGH COURT IN THE CASE OF TEJAS NETWORK LIMITED VS. DEPUTY COMMISSIONER OF INCOME-TAX (2015) (60 TAXMANN.COM 309), WHEREIN IT WAS HELD THAT THE A.O. COULD NOT DENY WEIGHTED DEDUCTION U/S 35(2AB) OF TH E ACT, WHEN THE ASSESSEE HAS CLAIMED THE SAME PURSUAN T TO MP NO.16/BANG/2020 M/S. PARK CONTROLS AND COMMUNICATIONS PVT. LTD., BA NGALORE PAGE 3 OF 7 THE CERTIFICATE ISSUED BY THE PRESCRIBED AUTHORITY. IT WAS FURTHER HELD THAT THE A.O. CANNOT SIT IN JUDGMENT O VER THE REPORT SUBMITTED BY THE PRESCRIBED AUTHORITY. THE LD. D.R. SUBMITTED THAT THE RATIO OF THE ABOVE SAID DEC ISION WOULD SHOW THAT THE A.O. IS BOUND TO ACCEPT THE AMO UNT MENTIONED IN THE PRESCRIBED CERTIFICATE I.E. FORM N O.3CL. THE LD D.R SUBMITTED THAT THE AO HAD RESTRICTED THE DEDUCTION IN THIS CASE TO THE EXTENT CERTIFIED BY T HE PRESCRIBED AUTHORITY IN FORM NO.3CL. HOWEVER, THE TRIBUNAL DID NOT FOLLOW THE BINDING DECISION RENDER ED BY THE JURISDICTIONAL HIGH COURT AND HENCE, NON- CONSIDERATION OF THE ABOVE SAID JURISDICTIONAL HIGH COURTS DECISION RESULTS IN A MISTAKE APPARENT FROM RECORD. 4. THE LD. D.R. FURTHER SUBMITTED THAT IN THE CASE OF MAHINDRA ELECTRIC MOBILITY LTD. (SUPRA), THE ASSESS EE DID NOT FURNISH FORM NO.3CL AT ALL, WHEREAS IN THE INST ANT CASE, THE FORM NO.3CL WAS SUBMITTED BY THE ASSESSEE TO THE AO. HENCE, THE DECISION RENDERED IN THE CASE O F MAHINDRA ELECTRIC MOBILITY LTD. IS DISTINGUISHABLE ON FACTS AND THE TRIBUNAL HAS COMMITTED AN ERROR IN FOLLOWIN G THE SAME. ACCORDINGLY, THE LD. D.R. PRAYED THAT RECALL OF THE IMPUGNED ORDER IN VIEW OF THE ABOVE SAID MISTAKES POINTED OUT BY THE REVENUE. 5. ON THE CONTRARY, THE LD. A.R. SUBMITTED THAT THE FACTS PREVAILING IN THE CASE OF TEJAS NETWORK LTD. (SUPRA) IS MP NO.16/BANG/2020 M/S. PARK CONTROLS AND COMMUNICATIONS PVT. LTD., BA NGALORE PAGE 4 OF 7 DIFFERENT AND HENCE THE SAID DECISION CANNOT BE APP LIED TO THE FACTS OF THE PRESENT CASE. HE SUBMITTED THAT I N THE CASE OF TEJAS NETWORK LTD, THE HONBLE HIGH COURT H AS CONSIDERED THE QUESTION AS TO WHETHER THE A.O. CAN REJECT THE DEDUCTION CLAIMED BY THE ASSESSEE ON THE BASIS OF EXPENDITURE CERTIFIED BY THE PRESCRIBED AUTHORITY I N FORM NO.3CL AS THE AMOUNT OF SCIENTIFIC EXPENDITURE BY DISREGARDING FORM NO.3 CL. THE A.O., IN THE ABOVE SAID CASE, DID NOT ALLOW DEDUCTION CLAIMED BY THE ASSESS EE U/S 35(2AB) OF THE ACT AS PER FORM NO.3CL. THE HONBLE HIGH COURT HELD THAT THE AO CANNOT SIT IN JUDGEMENT OVER THE REPORT SUBMITTED BY PRESCRIBED AUTHORITY. 6. THE LD. A.R. SUBMITTED THAT THE ISSUE CONSIDERE D BY THE TRIBUNAL WAS WHETHER FORM NO.3CL IS MANDATORY F OR CLAIMING DEDUCTION DURING THE YEAR UNDER CONSIDERAT ION?. THIS SPECIFIC ISSUE WAS NOT BEFORE THE HONBLE HIGH COURT IN THE CASE OF TEJAS NETWORKS LTD (SUPRA). THIS QU ESTION CAME RELEVANT, SINCE EXPENDITURE INCURRED ON SCIENT IFIC RESEARCH AND CLAIMED BY THE ASSESSEE DURING THE YEA R UNDER CONSIDERATION WAS MORE THAN THE AMOUNT CERTIF IED IN FORM NO.3CL. IN THAT CONTEXT, THE TRIBUNAL FOLL OWED THE DECISION RENDERED IN THE CASE OF MAHINDRA ELECT RIC MOBILITY LTD., WHEREIN, AFTER ANALYSING THE PROVISI ONS OF ACT AND INCOME TAX RULES, THE COORDINATE BENCH HAD COME TO THE CONCLUSION THAT FORM NO.3CL HAD ATTAINE D SANCTITY ONLY W.E.F. 1.7.2016 AFTER AMENDMENT OF RU LE MP NO.16/BANG/2020 M/S. PARK CONTROLS AND COMMUNICATIONS PVT. LTD., BA NGALORE PAGE 5 OF 7 6(7A)(B) OF THE INCOME TAX RULES. PRIOR TO 1.7.201 6 FORM NO.3CL WAS HELD TO HAVE NO SANCTITY AND ACCORDINGLY , THE DEDUCTION CLAIMED BY THE ASSESSEE AS PER BOOKS OF ACCOUNTS WAS DIRECTED TO BE ALLOWED. 7. THE LD. A.R. FURTHER SUBMITTED THAT THE TRIBUNAL IN PARAGRAPH 7 OF ITS ORDER HAS ERRONEOUSLY MENTIONED THE ASSESSMENT YEAR AS 2014-15, WHEREAS, THE TRIBUNAL WAS ACTUALLY ADJUDICATING THE APPEAL PERTAINING TO ASSE SSMENT YEAR 2013-14. THE LD. A.R. SUBMITTED THAT THIS TYPOGRAPHICAL ERROR MAY KINDLY BE CORRECTED. 8. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WE AGREE WITH THE SUBMISSIONS OF LD. A.R. THAT THE HONBLE JURISDICTIONAL KARNATAKA HIGH COURT, IN THE CASE OF TEJAS NETWORK LTD. (SUPRA), HAS CONSIDERED AN ALTOGETHER DIFFERENT ISSUE AND HENCE IT WAS NOT REL EVANT TO THE ISSUE ADJUDICATED BY THE TRIBUNAL IN THE INSTAN T CASE. HENCE, WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS MADE BY LD. D.R. WITH REGARD TO THE ABOVE SAID CASE. WE NOTICE THAT THE TRIBUNAL HAS FOLLOWED THE DECISION RENDERE D BY THE COORDINATE BENCH IN THE CASE OF MAHINDRA ELECTR IC MOBILITY LTD. (SUPRA), WHEREIN IT HAS BEEN CLEARLY HELD THAT FORM NO.3CL HAD NO LEGAL SANCTITY PRIOR TO 1.7.2016 . ACCORDINGLY, WE ARE OF THE VIEW THAT THE TRIBUNAL H AS TAKEN A VIEW ON THIS ISSUE BASED ON THE CASE LAWS R ELIED ON BY THE ASSESSEE BEFORE IT. WE ARE NOT ABLE APPR ECIATE MP NO.16/BANG/2020 M/S. PARK CONTROLS AND COMMUNICATIONS PVT. LTD., BA NGALORE PAGE 6 OF 7 THE CONTENTIONS ADVANCED BY LD D.R FOR DISTINGUISHI NG THE DECISION RENDERED IN THE CASE OF MAHINDRA ELECTRIC MOBILITY LTD (SUPRA). IN FACT, THE LAW INTERPRETED BY THE CO-ORDINATE BENCH IN THE ABOVE SAID CASE HAS BEEN FOLLOWED IN THE INSTANT CASE. 9. IT IS A WELL SETTLED PROPOSITION OF LAW THAT THE TRIBUNAL IS EMPOWERED TO RECTIFY THE MISTAKES APPARENT FROM RECORD UNDER THE POWERS GRANTED TO IT U/S 254(2) OF THE AC T. THE TRIBUNAL CANNOT REVIEW ITS ORDER UNDER THE GARB OF RECTIFICATION. IN THE INSTANT CASE, THE PETITION F ILED BY THE REVENUE WOULD MAKE THE TRIBUNAL TO REVIEW ITS ORDER , WHICH IS NOT PERMITTED UNDER SECTION 254(2) OF THE ACT. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THE PETITI ON FILED BY THE ASSESSEE. 10. WE NOTICE THAT, IN PARAGRAPH 7 OF THE ORDER PAS SED BY THE TRIBUNAL, THE ASSESSMENT YEAR HAS BEEN WRONG LY MENTIONED AS 2014-15, WHEREAS THE TRIBUNAL HAS DISPOSED OF THE APPEAL FOR THE ASSESSMENT YEAR 2013 -14. ACCORDINGLY, WE DIRECT THAT THE ASSESSMENT YEAR MENTIONED IN PARAGRAPH 7 OF THE ORDER OF THE TRIBUN AL SHOULD BE SUBSTITUTED BY 2013-14. MP NO.16/BANG/2020 M/S. PARK CONTROLS AND COMMUNICATIONS PVT. LTD., BA NGALORE PAGE 7 OF 7 11. IN THE RESULT, THE MISCELLANEOUS APPLICATION FI LED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST FEB, 2021 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 1 ST FEB, 2021. VG/SPS COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.