NIVO CONTROLS PRIVATE LIMITED , MUMBAI V. COMMISSIONER OF INCOME TAX 1, MUMBAI

MA 498/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5509 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 4 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 24-01-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 20-07-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital expenditure
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE S/ SHRI PAWAN SINGH ( JM ) & G. MANJUNATHA ( A M) M.A. NO. 498/MUM/2018 ARISING OUT OF I.T.A. NO. 3533 /MUM /20 1 4 (ASSESSMENT YEAR 20 0 9 - 1 0 ) M/S. NIVO CONTROLS PVT. LTD. 8, MOHATTA BHAVAN OFF. DR. E. MOSES ROAD WORLI, MUMBAI - 400 018. PAN : AAACN6646C VS. CIT - 1 MUMBAI ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SUBHASH S. SHETTY DEPARTMENT BY SHRI MANOJ KUMAR SINGH DATE OF HEARING 28 . 1 2 . 201 8 DATE OF PRONOUNCEMENT 24 . 1 . 201 9 O R D E R PER G. MANJUNATHA (A M) : - THE ASSESSEE HAS FILED THIS MISCELLANEOUS APPLICATION, SEEKING RECTIFICATION IN THE ORDER PASSED BY THE TRIBUNAL IN ITA NO. 3533/MUM/2014 FOR A.Y. 2009 - 10 VIDE ITS ORDER DATED 31.1.2018. 2. THE ASSESSEE HAS NARRA TED FACTS AND MISTAKE IN THE ORDER OF THE ITAT DATED 21.1.2018 IN ITS MISCELLANEOUS APPLICATION VIDE PARAGRAPH 2 - 7. RELEVANT OBSERVATIONS ARE AS UNDER : - 2. BEFORE THE TRIBUNAL, THE APPELLANT HAD CHALLENGED THE CIT - L'S EXERCISE OF POWER OF REVISION UNDER SECTION 263 OF THE ACT AND THE CONSEQUENT SETTING ASIDE OF THE ASSESSMENT ORDER ALLOWING THE CLAIM OF THE APPELLANT UNDER SECTION 35 OF THE ACT. 3. DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD CLAIMED DEDUCTION OF RS. 3,26,1717 - UNDER SECTION 35 (L)(IV) READ WITH SECTION 35 (2)(IA) OF THE ACT BEING THE CAPITAL EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH RELATED TO ITS BUSINESS. BEING SATISFIED WITH THE CLAIM MADE AND CONSISTENT WITH THE STAND TAKEN BY THE REVENUE IN THE EARLIER YEARS, THE ASSESSIN G OFFICER ALLOWED THE SAID CLAIM MADE BY THE APPELLANT. HOWEVER, THE CIT - 1 INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT SET 2 ASIDE THE ASSESSMENT ORDER WITH THE DIRECTION TO THE ASSESSING OFFICER TO FRAME FRESH ORDER AFTER DISALLOWING THE CLAIM OF DEDU CTION U/S. 35 OF THE ACT. WHILE COMING TO THE ABOVE CONCLUSION, THE CIT - 1 INTER - ALIA HELD THAT THE APPELLANT IS NOT ENTITLED TO ITS CLAIM UNDER SECTION 35(L)(IV) READ WITH SECTION 35(2)(IA) OF THE ACT BECAUSE IT HAD NOT MAINTAINED SEPARATE INDEPENDENT BOOK S OF ACCOUNT IN RESPECT OF ITS RESEARCH & DEVELOPMENT UNIT. 4. WHILE CHALLENGING THE ORDER OF THE CIT - 1 PASSED UNDER SECTION 263, THE APPELLANT INTER - ALIA SUBMITTED BEFORE THE HON'BLE TRIBUNAL THAT THE LEARNED CIT - 1 COMMITTED A GROSS ERROR OF LAW AND FACT IN COMING TO THE CONCLUSION THAT THE APPELLANT IS NOT ENTITLED TO THE DEDUCTION CLAIMED UNDER SECTION 35(L)(IV) READ WITH SECTION 35(2)(IA) BECAUSE IT HAD NOT MAINTAINED SEPARATE INDEPENDENT BOOKS OF ACCOUNT IN RESPECT OF THE RESEARCH & DEVELOPMENT UNIT. IT WAS FURTHER SUBMITTED THAT THERE WAS NO REQUIREMENT PRESCRIBED UNDER THE PROVISIONS OF SECTION 35(L)(IV) READ WITH SECTION 35(2)(IA) TO MAINTAIN SEPARATE INDEPENDENT BOOKS OF ACCOUNT IN RESPECT OF ITS RESEARCH & DEVELOPMENT UNIT TO BE ELIGIBLE TO MAKE A CLAIM FOR DEDUCTION UNDER THE SAID SECTION WITH REGARD TO THE CAPITAL EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH RELATED TO ITS BUSINESS. 5. WE ARE NOW IN RECEIPT OF THE ORDER OF THE HON'BLE TRIBUNAL AND ARE SURPRISED TO NOTE THAT THE TRIBUNAL HAD UPHEL D THE CONCLUSION OF THE CIT IN DENYING THE CLAIM OF THE APPELLANT F OR DEDUCTION UNDER SECTION 35(1 )(IV) READ WITH SEPARATE INDEPENDENT BOOKS OF ACCOUNT IN RESPECT OF THE RESEARCH & DEVELOPMENT UNIT. FURTHER, THE HON'BLE TRIBUNAL CAME TO THE CONCLUSION THAT THE ASSESSING OFFICER ERRED IN ALLOWING THE IMPUGNED DEDUCTION FIRSTLY WITHOUT ANY DISCUSSION IN THE ORDER AND SECONDLY WITHOUT APPRECIATING THAT THE APPELLANT FAILED TO ADDUCE ANY EVIDENCE TO JUSTIFY ITS CLAIM. 6. THE HON'BLE TRIBUNAL FAILED TO APPRECIA TE THAT THERE IS NO STATUTORY PROVISIONS IN THE ACT WHICH REQUIRED THE MAINTENANCE OF SEPARATE INDEPENDENT BOOKS OF ACCOUNT IN RESPECT OF THE RESEARCH & DEVELOPMENT UNIT SO AS TO BE ELIGIBLE TO CLAIM DEDUCTION UNDER SECTION 35(L)(IV) READ WITH SECTIO N 35(2 )(IA) OF THE ACT. THE HON BLE TRIBUNAL ALSO FAILED TO APPRECIATE THAT THERE WERE CORRESPONDENCE BETWEEN THE ASSESSING OFFICER AND THE APPELLANT WITH REGARD TO THE CLAIM UNDER SECTION 35(L)(IV) READ WITH SECTION 35(2)(IA) WHICH RESULTED IN THE GRANT OF APPE LLANTS CLAIM AND THAT THE APPELLANT CANNOT BE FAULTED IF THERE IS NO DISCUSSION OF THE SAME IN THE ASSESSMENT ORDER. 7. ON THE FACTS AND CIRCUMSTANCE OF THE CASE NARRATED ABOVE AND THE STATUTORY PROVISIONS OF THE ACT, THE IMPUGNED ORDER OF THE HO N BLE TRI BUNAL SUFFERS FROM MISTAKE APPARENT FROM THE RECORD. IT IS THEREFORE REQUESTED THAT THE MISTAKE APPARENT FROM THE RECORD BE RECTIFIED IN THE INTEREST OF JUSTICE. 3 3. LEARNED AR FOR THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT THERE IS AN ERROR IN THE ORDER OF THE ITAT IN SO FAR AS FINDINGS WITH REGARD TO DENIAL OF DEDUCTION CLAIMED U/S. 35(1) OF THE I.T. ACT, 1961 IN RESPECT OF R&D EXPENDITURE WHERE IT WAS OBSERVED THAT THE ASSESSEE NEEDS TO MAINTAIN SEPARATE BOOKS OF ACCOUNT IN ORDER TO BE ELIGIBLE F OR SAID DEDUCTION , BUT THE FACTS REMAINS THAT THE ACT NEVER PRESCRIBE MAINTENANCE OF SEPARATE BOOKS OF ACCOUNT FOR R&D FACILITIES AND EVEN IF THE ASSESSEE HAS MAINTAINED ITS ACCOUNTS ALOGNWITH REGULAR BOOKS OF ACCOUNT, THE ASSESSEE IS ELIGIBLE FOR DEDUCTIO N, IF OTHER CONDITIONS PRESCRIBED THEREIN ARE FULFILLED. THE ITAT , IN THE IMPUGNED ORDER HAS OBSERVED THAT IN ORDER TO GET BENEFIT OF DEDUCTION U/S. 35(1), THE ASSESSEE NEEDS TO MAINTAIN SEPARATE BOOKS OF ACCOUNT WHICH CONSTITUTE MISTAKE APPARENT FROM RECO RD FROM THE FACE OF THE ORDER, WHICH REQUIRES RECTIFICATION U/S. 254(2) OF THE I.T. ACT, 1961. 4. LEARNED DR, ON THE OTHER HAND, SUBMITTED THAT THERE IS NO ERROR IN THE ORDER OF THE TRIBUNAL AND WHAT LEARNED AR OF THE ASSESSEE SEEKING IS TO REVIEW OF THE JUDGEMENT IN THE GUISE OF MISTAKE WITHOUT POINTING OUT ANY MISTAKE IN THE ORDER OF THE TRIBUNAL WHICH IS NOT PERMISSIBLE U/S. 254(2) OF THE ACT. THEREFORE THERE IS NO MERIT IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE AND HENCE THE SAME MAY BE D ISMISSED. 5. WE HAVE HEARD BOTH THE PARTIES AND CONSIDER ED THE MATERIAL AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY CONSIDERED THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE SEEKING RECTIFICATION OF THE ORDER OF THE TRIBUNAL. WE FIND THAT THE ASSESSE E IS SEEKING RECTIFICATION OF THE ITAT ORDER ON THE GROUND THAT THE TRIBUNAL HAS RECORDED INCORRECT FINDINGS IN SO FAR AS MAINTENANCE OF BOOKS OF ACCOUNT IN RESPECT OF R&D FACILITY. WE FURTHER NOTICED THAT THE ARGUMENTS ADVANCED BY THE ASSESSEE HAVE BEEN C ONSIDERED IN THE LIGHT OF THE PROVISIONS OF SECTION 35(1) OF THE I.T. ACT , 1961 AND RULE 5D OF THE I.T. RULES, 1962 ; B EFORE COMING TO THE CONCLUSION THAT IN ORDER TO BE ELIGIBLE FOR DEDUCTION U/S. 35(1) OF THE ACT, THE ASSESSEE IS REQUIRED TO MAINTAIN SEPA RATE BOOKS OF ACCOUNT IN RESPECT OF ITS R&D FACILITIES. WE , THEREFORE ARE OF THE CONSIDERED VIEW THAT THERE 4 IS NO ERROR IN THE FINDINGS GIVEN BY THE TRIBUNAL IN ITS ORDER DATED 31.1.2018. THE ASSESSEE IS SEEKING REVIEW OF THE ORDER PASSED BY THE TRIBUNAL I N THE GUISE OF RECTIFICATION WHICH IS NOT PERMISSIBLE U/S. 254(2) OF THE ACT. HENCE, MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE IS DISMISSED. ORDER HAS BE E N PRONOUNCED IN THE COURT ON 24 . 1 .201 9 . SD/ - SD/ - (PAWAN SINGH ) ( G. MANJUNATHA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 24 / 1 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A ) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR PRIVATE SECRETARY ) PS ITAT, MUMBAI