Ashok Leyland Ltd. Vs DCIT (ITAT Chennai)
Summary: The Chennai Bench of the Income Tax Appellate Tribunal disposed of cross appeals filed by Ashok Leyland Ltd. and the Revenue against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, dated 15.12.2023 for Assessment Year 2010-11.
In the assessee’s appeal, the Tribunal considered the disallowance of weighted deduction claimed under Section 35(2AB) of the Income Tax Act, 1961 in respect of R&D expenditure. The Assessing Officer had restricted the claim based on the expenditure quantified by the Department of Scientific and Industrial Research (DSIR) in Form 3CL. The CIT(A) upheld the restriction on the basis that Form 3CL was the basis for granting the weighted deduction.
The Tribunal noted that the assessee had three in-house R&D facilities duly approved by DSIR and that the expenditure claimed for those facilities had been audited and certified by the statutory auditors. It observed that, prior to the amendment to Rule 6(7A) of the Income Tax Rules, 1962 with effect from 01.07.2016, the prescribed authority was not required to quantify the expenditure incurred for the in-house R&D facility in Form 3CL. Following the reasoning recorded in the Tribunal’s earlier decision concerning M/s. Sundaram Fasteners Ltd. and the decision referred to therein concerning Crompton Greaves Ltd., the Tribunal held that the deduction could not be restricted to the expenditure quantified by DSIR for the year under consideration. The assessee’s ground was accordingly allowed and the AO was directed to grant deduction on R&D expenditure to the tune of Rs.35,92,94,618/-.
