Arrdy Engineering Innovations (P.) Ltd. Vs ACIT (ITAT Visakhapatnam)
ITAT Vishakhapatnam allowed weighted deduction under section 35(2AB) of the Income Tax Act since amount received from Department of Scientific & Industrial Research [DSIR] is soft loan and hence cannot be considered as grant-in-aid.
Facts- On verification of records, it was found that the assessee-company had entered into an agreement with Department of Scientific & Industrial Research for R&D of a particular project, whereas assessee has claimed to have spent Rs.1,72,85,369/- and claimed weighted deduction of Rs. 3,45,70,738 u/s. 35(2AB) of the Act. AO also noticed that assessee has received a grant of Rs.50,00,000/- from DSIR during the year. Therefore, he concluded that assessee is eligible for deduction on the balance expenditure of Rs. 1,22,85,369/- [Rs.1,72,85,369/- – Rs.50,00,000/-] thereby disallowing the excess claim of weighted deduction of Rs. 1,00,00,000/-.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- The Ministry of Science and Technology has also confirmed that the funds provided by them is in the nature of soft loan and not a grant-in-aid for the earlier loan taken by the assessee. Since the terms and conditions of the tripartite agreement are identical for both the assessment years the argument of the Ld. AR deserves consideration. Further the assessee has categorized the amount received from DSIR as unsecured loans in their financial statements which was not disputed by the revenue. Further, Ld.AR also submitted a copy of invoice dated 17.07.2014 wherein interest on the repayment of the loan has been disclosed and consequently tax has been deducted at source on the interest paid.
