Ultramarine & Pigments Ltd. Vs ACIT (ITAT Mumbai)
In Ultramarine & Pigments Ltd. Vs ACIT, the ITAT Mumbai considered an appeal arising from rectification proceedings under Section 154 relating to deduction claimed under Section 35(2AB) of the Income Tax Act for AY 2018-19. The assessee, engaged in manufacture of chemical products and power generation through windmills, had claimed weighted deduction of Rs. 1.94 crore under Section 35(2AB) in respect of expenditure incurred on its in-house scientific research and development facility. During scrutiny assessment, the assessee furnished details of capital and revenue expenditure. However, the Assessing Officer disallowed deduction relating to capital expenditure amounting to Rs. 26.13 lakh, being 150% of Rs. 17.42 lakh, on the ground that the assessee failed to furnish Form 3CL and supporting documents.
Subsequently, the assessee filed a rectification application under Section 154 relying upon Form 3CL dated 24.06.2020 issued by the Department of Scientific and Industrial Research (DSIR). The assessee contended that DSIR had approved the entire capital expenditure but approved revenue expenditure only partly, and therefore the disallowance should be restricted to Rs. 12.99 lakh instead of Rs. 26.13 lakh. The Assessing Officer rejected the rectification application holding that Form 3CL constituted additional evidence which could not be considered in proceedings under Section 154. The CIT(A) upheld the rectification order, observing that there was no mistake apparent from the record and that consideration of such documents would involve a debatable issue.
