Case Law Details
Americhem Polymers India Pvt Ltd Vs ACIT (ITAT Pune)
ITAT note that the deduction claimed u/s. 35(2AB) of the Act was denied for non-submission of copy of report of the competent authority i.e. DSIR in the prescribed form i.e. Form 3CL vide para 3 of the assessment order. The CIT(A) confirmed the order of AO. We note that prior to amendment to Clause (b) of Rule 6(7A) w.e.f. 01-07-2016, the position was that the prescribed authority shall submits its report in relation to the approval of in-house Research and Development facility in Form 3CL to the Director General (Income Tax Exemptions) within sixty days of its granting approval. After amendment w.e.f. 01-07-2016 it is provided the prescribed authority shall furnish electronically its report, – (i) in relation to the approval of in-house Research and Development facility in Part A of Form No. 3CL; (ii) quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Act in Part B of Form No. 3CL. Therefore, it is clear before amendment the requirement of registration with DSIR is sufficient, no grant of year to year approval, the amount spent on Research and Development by a company qualifying for weighted deduction is required. Thus, we are of the opinion that once the assessee has been registered, other necessary requirements have been satisfied, the entire amount spent on Research and Development qualifies for weighted deduction u/s. 35(2AB) of the Act irrespective of the fact that some amount was not approved by the DSIR. Therefore, the assessment year is being 2016-17, which stands prior to amendment i.e. w.e.f. 01-07-2016, we hold the assessee is entitled to claim deduction u/s. 35(2AB) of the Act. Thus, the order of CIT(A) is not justified and it is set aside. Thus, grounds of appeal raised by the assessee are allowed.
FULL TEXT OF THE ORDER OF ITAT PUNE
This appeal by the assessee against the order dated 31-01-2023 passed by the Commissioner of Income-tax (Appeals), Pune – 11, Pune for assessment year 2016-17.
2. The only issue raised by the assessee is to be decided is as to whether the CIT(A) justified in confirming the disallowance made by the AO on account of weighted deduction u/s 35(2AB) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) in the facts and circumstances of the case.
3. At the outset, both the parties conceded that the issue raised in this appeal is covered in favour of the assessee for the reason, non-applicability of the amendment carried out to Clause (b) of Rule 6(7A) w.e.f. 01-07-2016 for the year under consideration i.e. A.Y. 2016-17.
4. On perusal of the order of AO, we note that the deduction claimed u/s. 35(2AB) of the Act was denied for non-submission of copy of report of the competent authority i.e. DSIR in the prescribed form i.e. Form 3CL vide para 3 of the assessment order. The CIT(A) confirmed the order of AO. We note that prior to amendment to Clause (b) of Rule 6(7A) w.e.f. 01-07-2016, the position was that the prescribed authority shall submits its report in relation to the approval of in-house Research and Development facility in Form 3CL to the Director General (Income Tax Exemptions) within sixty days of its granting approval. After amendment w.e.f. 01-07-2016 it is provided the prescribed authority shall furnish electronically its report, – (i) in relation to the approval of in-house Research and Development facility in Part A of Form No. 3CL; (ii) quantifying the expenditure incurred on in-house research and development facility by the company during the previous year and eligible for weighted deduction under sub-section (2AB) of section 35 of the Act in Part B of Form No. 3CL. Therefore, it is clear before amendment the requirement of registration with DSIR is sufficient, no grant of year to year approval, the amount spent on Research and Development by a company qualifying for weighted deduction is required. Thus, we are of the opinion that once the assessee has been registered, other necessary requirements have been satisfied, the entire amount spent on Research and Development qualifies for weighted deduction u/s. 35(2AB) of the Act irrespective of the fact that some amount was not approved by the DSIR. Therefore, the assessment year is being 2016-17, which stands prior to amendment i.e. w.e.f. 01-07-2016, we hold the assessee is entitled to claim deduction u/s. 35(2AB) of the Act. Thus, the order of CIT(A) is not justified and it is set aside. Thus, grounds of appeal raised by the assessee are allowed.
5. In the result, the appeal of assessee is allowed.
Order pronounced in the open court on 10th May, 2023.
