Sri Rama Agri Genetics (India) Pvt. Ltd. Vs DCIT (ITAT Hyderabad)
Conclusion: A belated filing of Form 3CLA was a curable procedural defect and could not deprive an assessee of weighted deduction under section 35(2AB) where the substantive conditions for allowance of the deduction stand fulfilled. Technical lapses could not eclipse statutory benefits.
Held: Assessee-company engaged in production and marketing of genetically improved seeds claimed weighted deduction under section 35(2AB) amounting to ₹2.07 crore towards expenditure incurred on in-house scientific research and development. During scrutiny, AO noticed that though assessee possessed the requisite DSIR approvals and had furnished Forms 3CM and 3CL, the audit report in Form 3CLA had been uploaded on 11.07.2019, i.e., after the due date prescribed under section 139(1). Holding timely filing of Form 3CLA to be a mandatory precondition, AO disallowed the entire deduction. Assessee contended that the delay was inadvertent and arose due to the procedural change introduced by the Income-tax (Tenth Amendment) Rules, 2016, which required electronic filing of Form 3CLA with DSIR. Assessee argued that all substantive conditions prescribed under section 35(2AB) stood satisfied and the delayed filing of Form 3CLA constituted only a procedural lapse which could not defeat a substantive statutory benefit. It was submitted that the amended filing requirement had been introduced only recently and the delay was unintentional. Reliance was placed on the decisions in ACIT v. Raj Petro Specialties Pvt. Ltd. and Edgeverve Systems Ltd. v. ACIT. Revenue contended that furnishing Form 3CLA within the prescribed due date was a statutory condition under Rule 6 and non-compliance disentitled the assessee from claiming weighted deduction under section 35(2AB). It was held that where assessee had obtained approval of its in-house R&D facility and had otherwise complied with the substantive requirements of section 35(2AB), mere delay in furnishing Form 3CLA could not operate to deny the deduction. The requirement regarding timely filing of the audit report was procedural in nature and could not override the substantive entitlement granted by the statute. Hyper-technical interpretation leading to forfeiture of a legitimate deduction was impermissible, particularly when the delay arose in the immediate aftermath of a newly introduced electronic filing requirement.
