INCOME TAX ACT, 1961

Section 35(2AB)

Business deduction under section 35(2AB) - Allowability - Non-receipt of Form No.3CL -

Assessee was engaged in auto electronic components and had established R&D facility for which it claimed weighted deduction under section 35(2AB). AO had only allowed the same to the extent of Rs. 5.78 crores based on Form No. 3CL submitted by assessee. Therefore, balance of Rs. 44,86,822 was disallowed under section 35(2AB). Commissioner (Appeals) had restricted the same to Rs. 29,11,882, against which assessee was in appeal. Held: The recognition given by the prescribed authority which was mandate of section 35(2AB) was maintained and once the recognition was so maintained, assessee had to be accorded deduction under section 35(2AB). The non-receipt of Form No. 3CM for the intervening three years was at best a procedural lapse and was not fatal for denial of claim of deduction under section 35(2AB). The prescribed authority in any case under the pre-amended provisions had no authority to look into the nature and quantum of expenditure except in the first year to see investment in land and building. After recognition of facility and approval by DSIR, AO was to allow the claim of assessee after verifying the same. Thus, AO was directed to allow deduction claimed under section 35(2AB).

REFERRED : Minilec India Pvt. Ltd. v. ACIT in ITA No.690/PUN/2015 dated 9-4-2018; CIT v. Wheels India Ltd. (2011) 336 ITR 513 (Mad); Nath Biogenes India Ltd. v. ACIT in ITA No.367/PN/2012, relating to assessment year 2008-09, Order, dated 27-1-2014; ACIT v. Meco Instruments (P.) Ltd. (2010) 7 taxmann.com 24 (Mum) vide Order, dated 20-8-2010; Advik Hi tech (P.) Ltd. v. Addl. CIT (2014) 51 taxmann.com 245 (Pune-Trib.)

FAVOUR : In assessee's favour

A.Y. : 2014-15

SUBSCRIBE FOR FULL CONTENT