INCOME TAX ACT, 1961

Section 35(2AB)

Business deduction under section 35(2AB) - Expenditure on scientific research - Denial of grant of approval -

Assessee-company filed an instant writ petition challenging the order issued by Revenue whereby Research and Development facility of the assessee, for the purpose of section 35(2AB) was approved only with effect from 1-4-2018. It was the claim of the assessee that the same should have been approved with effect from 1-4-2017. Revenue contended that the application seeking approval in Form 3CK should have been filed on or before 31-3-2018 for the approval to be granted from 1-4-2017; however, the assessee submitted the Form 3CK only on 27-4-2018. Assessee submitted that although the Guidelines for approval in Form 3CM under section 35(2AB) required the application (Form 3CK) to be submitted online but as the online portal of the Revenue was not functioning between the period 8-3-2018 to at least 25-4-2018, thus, the application was submitted in the physical form. Further, it also submitted that in accordance the said Guidelines, Form 3CK, in the physical form, could have been submitted only under the signatures of the MD and as its MD was not available in India from 8-3-2018 till 25-4-2018; the Form 3CK was submitted in the physical form only on 27-4-2018. Held: The submission of the assessee that the online portal of the Revenue was not working from 8-3-2018 had not been specifically denied by the Revenue. Further, only because the online portal of the Revenue was not working, it decided to accept the application even in physical form; however, the assessee could not submit the application in physical form in time as its MD was not available in India from 8-3-2018 till 25-4-2018. Further, it is settled position that the rights of the parties cannot be subjugated to the poor and inefficient software systems adopted by the Revenue. The software systems adopted by the Revenue have to be in tune with the law, and not vice verse and the system limitations cannot be a justification to deny the relief, to which the parties are legally entitled. Accordingly, the assessee could not be denied the grant of the approval under section 35(2AB) on such hyper technical ground. Therefore, on the petitioner satisfying the Revenue of the reasons for non-submission of Form 3CK in physical form on or before 31-3-2018, the Revenue should consider the request of the assessee to condone the delay and grant approval to the assessee under section 35(2AB) for the financial year 2017-18.

REFERRED : Vision Distribution Pvt. Ltd. v. Commissioner, State Goods & Services Tax & Ors., WP(C) No.8317/2019 (Del-HC)

FAVOUR : Directions issued

A.Y. :

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