INCOME TAX ACT, 1961

Section 35

Business deduction under section 35 - Disallowance of weighted deduction under section 35(2AB) - Assessee complied with legal requirements bilatedly -

Assessee was engaged in business of “manufacturing of engineering goods”. AO observed that assessee claimed weighted deduction under section 35(2AB). When he sought particulars, assessee filed Form 3CM issued by Competent Authority wherein research and development facilities were approved with effect from 1-4-2013 to 31-3-2015 for the purpose of section 35(2AB). However for availing the benefit under section 35(2AB), pre-requisite is classification and quantification of eligible expenses in Form 3CL, which has to be issued by the competent authority. AO held that assessee had neither produced Form 3CL nor any proof relating to its submission of such expenses as provided in the rule before competent authority for consideration and disallowed assessee's claim. Held: Though assessee has produced a copy of Form 3CM before AO, it had not attached any enclosure specifying a list of assessee's various in-house research and development facilities, etc. From the material available on record, it was clear that assessee filed certain particulars before competent authority after a long gap i.e. about 2 years and 3 months after the due date and almost at the end of assessment proceedings under section 143(3). In order to claim exemption from payment of tax, assessee has to comply with provisions of the Act as well as Rules made thereunder. Since assessee has not complied with the provisions as required and has not laid the required material before the authorities concerned, the disallowance made was justified.

REFERRED : CIT v. Ramakrishna Deo (1959) 35 ITR 312(SC) : 1959 TaxPub(DT) 0094 (SC) CIT v. TVS Electronics Ltd. [in TCA Nos.1457 & 1458 of 2008, dt. 19-3-2019] : 2019 TaxPub(DT) 3173 (Mad-HC)

FAVOUR : Against the assessee

A.Y. : 2015-16

INCOME TAX ACT, 1961

Section 37(1)

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