K.N.Bio Sciences India Private Limited , Hyderabad v. Asst. Commissioner of Income Tax, Circle-2(1), Hyderabad

ITA 1344/Hyd/2019 | 2016-2017
Pronouncement Date: 03-03-2021 | Result: Allowed

Appeal Details

RSA Number 134422514 RSA 2019
Assessee PAN ITANO1344O
Bench Hyderabad
Appeal Number ITA 1344/Hyd/2019
Duration Of Justice 1 year(s) 6 month(s) 4 day(s)
Appellant K.N.Bio Sciences India Private Limited , Hyderabad
Respondent Asst. Commissioner of Income Tax, Circle-2(1), Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 03-03-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted DB-B
Tribunal Order Date 03-03-2021
Last Hearing Date 25-02-2021
First Hearing Date 25-02-2021
Assessment Year 2016-2017
Appeal Filed On 27-08-2019
Judgment Text
ITA NO 1344 OF 2019 KN BIO SCIENCES INDIA P LTD H YDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1344/HYD/2019 ASSESSMENT YEAR: 2016-17 KN BIOSCIENCES INDIA P LTD HYDERABAD PAN:AACCK3104G VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 2(1) HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI C. SURESH REVENUE BY : SRI M. MAHIDHAR DR DATE OF HEARING: 25/02/2021 DATE OF PRONOUNCEMENT: 03/03/2021 ORDER PER SMT. P. MADHAVI DEVI J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2016-17 AGAIN ST THE ORDER OF THE CIT (A)-2 HYDERABAD DATED 14.6.2 019. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF FERTILIZ ERS CHEMICALS AND PAINTS ETC. FILED ITS RETURN OF INCOME FOR TH E A.Y 2016-17 ON 23.11.2016 ADMITTING TOTAL INCOME OF RS.42 09 818/- . THE CASE WAS SELECTED FOR LIMITED SCRUTINY THROUGH CASS. DUR ING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE ACT THE A O OBSERVED THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 35 OF T HE ACT AMOUNTING TO RS.62 61 298/- (REVENUE EXPENDITURE) A ND RS.9 22 965/- (CAPITAL EXPENDITURE). THE AO WAS THE REFORE REQUIRED THE ASSESSEE TO FURNISH FORMS 3CL/3CM IN S UPPORT OF ITA NO 1344 OF 2019 KN BIO SCIENCES INDIA P LTD H YDERABAD PAGE 2 OF 5 THE CLAIM OF DEDUCTION BUT THE SAME NOT SUBMITTED BY THE ASSESSEE. THEREAFTER THE ASSESSEE WAS GIVEN A FINA L OPPORTUNITY TO SHOW CAUSE WHY THE DEDUCTION OF RS.31 30 649/- AND RS.9 22 965/- SHOULD NOT DISALLOWED U/S 35 OF THE I .T. ACT. THE ASSESSEE FURNISHED A LETTER DATED 20.09.2018 STATIN G THAT IT HAS THE DSIR CERTIFICATE WHICH IS VALID UPTO 31.3.2021. HOWEVER ON PERUSAL OF THE CERTIFICATE THE AO OBSERVED THAT THE CERTIFICATE IS ISSUED FOR THE PURPOSE OF CUSTOM DUTY EXEMPTION WHI CH CANNOT BE CONSIDERED FOR THE PURPOSE OF DEDUCTION U/S 35 OF T HE I.T. ACT. OBSERVING THAT THE ASSESSEE HAS NOT FURNISHED FORMS 3CL/3CM IN THE PRESCRIBED FORM BEFORE THE PRESCRIBED AUTHORITY THE AO DISALLOWED THE CLAIM U/S 35 OF THE I.T. ACT. AGGRIE VED THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO GRANTED PARTIAL RELIEF TO THE ASSESSEE BY DELETING THE ADDI TION OF RS.9 22 965/- AND CONFIRMED THE DISALLOWANCE OF WEI GHTED DEDUCTION U/S 35(2AB) OF THE ACT. AGGRIEVED THE AS SESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FO LLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )-2 HAS ERRED IN LAW AND FACT BY CONFIRMING THE DISALLOWANC E OF WEIGHTED DEDUCTION U/S 35(2AB) OF THE INCOME TAX AC T 1961 (HEREINAFTER REFERRED TO AS 'ACT') TO THE EXTENT OF RS.31 30 649 WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HA S AN IN HOUSE R&D FACILITY WHICH HAS BEEN GIVEN RECOGNITION BY PRESCRIBED AUTHORITY AND HAS FULFILLED ALL THE COND ITIONS PROVIDED IN SECTION 35(2AB) OF THE ACT READ WITH RU LE 6 OF THE INCOME TAX RULES 1962 (HEREINAFTER REFERRED TO AS 'RULES') FROM IT SIDE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -2 HAS ERRED IN LAW AND FACT BY CONFIRMING THE DISALLOWANC E OF WEIGHTED DEDUCTION U/S 35(2AB) OF THE ACT BY FAILIN G TO NOTE THAT THE APPELLANT HAS APPROVAL FROM THE PRESCRIBED AUTHORITY IN FORM 3CM FOR THE BLOCK PERIOD PRIOR TO THE YEAR UNDER APPEAL (01.04.2010 TO 31.03.2015) AND THE BLOCK PER IOD SUBSEQUENT TO THE YEAR UNDER APPEAL (01.04.2018 TO 31.03.2021) AND THE ABSENCE OF FORM 3CM FOR THE INT ERIM PERIOD IN WHICH THE YEAR. UNDER APPEAL IS INCLUDED WAS DUE TO A CLERICAL LAPSE ON PART OF THE PRESCRIBED AUTHO RITY (DSIR). ITA NO 1344 OF 2019 KN BIO SCIENCES INDIA P LTD H YDERABAD PAGE 3 OF 5 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -2 HAS ERRED IN LAW AND FACT BY CONFIRMING THE DISALLOWANC E OF WEIGHTED DEDUCTION U/S 35(2AB) BY FAILING TO NOTE T HAT THE LEGAL MAXIM 'LEX NON COGIT IMPOSSIBILA' (LAW DOES N OT COMPEL A MAN TO DO THAT WHICH HE CANNOT POSSIBLY PERFORM) IS APPLICABLE TO THE CASE OF YOUR APPELLANT SINCE YOUR APPELLANT HAS DULY FILED APPLICATION IN FORM 3CK AFTER WHICH THE ISSUE OF FORM 3CM IS VESTED WITH THE PRESCRIBED AUTHORITY AND WHOLLY OUT OF THE SCOPE OF YOUR APPELLANT. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -2 HAS ERRED IN LAW AND FACT BY CONFIRMING THE DISALLOWANC E OF WEIGHTED DEDUCTION U/S 35(2AB) BY FAILING TO NOTE T HAT: - A) THE IN-HOUSE R&D FACILITY OF THE APPELLANT HAS B EEN RECOGNIZED UP TO 31.03.2021 B) THE APPELLANT HAS RECEIVED APPROVAL IN FORM 3CM FOR THE PERIOD 01.04.2010 TO 31.03.2015. C) THE APPELLANT HAS FILED FORM 3CK FOR THE SUBJECT AY MAINTAINED SEPARATE BOOKS OF ACCOUNTS FOR THE FACIL ITY AND FILED AUDIT REPORT WITHIN PRESCRIBED TIME WITH THE DSIR. D) AFTER FILING FORM 3CK APPELLANT WAS UNDER A BON AFIDE BELIEF THAT THE FORM 3CM WOULD BE RECEIVED. E) ON FOLLOW UP WITH DSIR FOR FORM 3CM IT WAS ORAL LY INFORMED THAT FORM 3CK WAS NOT TRACEABLE AND THAT A NY FURTHER REMINDERS WOULD BE CONSIDERED AS FRESH APPL ICATION I.E. CONSIDERED PROSPECTIVELY. F) APPELLANT HAS RECEIVED FORM 3CM FOR THE PERIOD SUBSEQUENT TO SUBJECT AY I.E 01.04.2018 TO 31.03.20 21. G) APPELLANT HAS FULFILLED ALL THE CONDITIONS CAST ON IT UNDER SECTION 35(2AB) OF THE ACT AND UNDER RULE 6 OF THE RULES. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -2 HAS ERRED IN LAW AND FACT BY CONFIRMING THE DISALLOWANC E OF WEIGHTED DEDUCTION U/S 35(2AB) AND HAS FAILED TO NO TE THAT THE EXISTENCE OF RECOGNITION OF THE IN HOUSE R&D FA CILITY IS SUFFICIENT FOR CLAIMING DEDUCTION U/S 35(2AB) AND T HE NON- RECEIPT' OF FORM 3CM FOR A PARTICULAR YEAR DUE TO C LERICAL ERROR IS ONLY A TECHNICAL LAPSE. 6. ANY OTHER GROUND/GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING. 3. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAS BEEN GRANTED CERTIFICATE BY DSIR F OR THE EARLIER AS WELL AS SUBSEQUENT A.YS AND IT IS ONLY FOR THE R ELEVANT A.Y THAT ITA NO 1344 OF 2019 KN BIO SCIENCES INDIA P LTD H YDERABAD PAGE 4 OF 5 FORMS 3CL/3CM WERE NOT ISSUED BY THE DSIR. HE SUBMI TTED THAT THE ASSESSEE HAS SUBMITTED FORM 3CK TO THE PRESCRIB ED AUTHORITY I.E. DSIR BUT HAS NOT RECEIVED ANY COMMUNICATION FR OM THEM AND ON ORAL INQUIRY BY THE ASSESSEE THE ASSESSEE WAS I NFORMED THAT THE ASSESSEES APPLICATION HAS NOT REACHED THE PRES CRIBED AUTHORITY AND THE ASSESSEE WAS DIRECTED TO SUBMIT A NOTHER FORM. HE SUBMITTED THAT THE ASSESSEE HAS FURNISHED ALL TH E MATERIAL BEFORE THE DSIR AND THE ASSESSEE CANNOT BE FOUND T O BE AT FAULT AS THE ASSESSEE CANNOT BE EXPECTED TO DO THE IMPOSS IBLE AND THEREFORE THE ASSESSEE SHOULD BE GRANTED WT. DEDUC TION U/S 35(2AB) OF THE ACT AS CLAIMED BY THE ASSESSEE. FOR THIS PROPOSITION THE LEARNED COUNSEL FOR THE ASSESSEE P LACED RELIANCE UPON THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. TVS ELECTRONICS LTD (2019) 419 ITR 187 (MAD .). 4. THE LEARNED DR ON THE OTHER HAND SUBMITTED THA T FORM 3CM/3CL ARE NOT MERE PROCEDURAL FORMS BUT HAVE TO BE ISSUED BY THE PRESCRIBED AUTHORITY I.E. DSIR QUANTI FYING THE AMOUNT ELIGIBLE FOR DEDUCTION U/S 35 (2AB) OF THE A CT AND THEREFORE WITHOUT SUCH FORM THE ASSESSEE CANNOT B E GRANTED WT. DEDUCTION U/S 35AB OF THE ACT. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD WE FIND THAT THE ASSESSEE HAS FILED FORM 3CK BEFORE THE PRESCRIBED AUTHORITY AND THE POSTAL ACKNOWLEDGEMENT IS ALSO PLACED BEFORE US AS PROOF OF THE SAID SUBMISSION. I N VIEW OF THE SAME WE ARE OF THE OPINION THAT THE ASSESSEE SHOUL D PURSUE AND SEEK INFORMATION FROM THE PRESCRIBED AUTHORITY FOR ISSUANCE OF FORMS 3CL/3CM AND THE AO IS ALSO DIRECTED TO SEEK I NFORMATION FROM THE DSIR ABOUT THE OUTCOME OF THE APPLICATION MADE BY THE ASSESSEE I.E. FORM 3CK. ON THE BASIS OF SUCH INFORM ATION RECEIVED ITA NO 1344 OF 2019 KN BIO SCIENCES INDIA P LTD H YDERABAD PAGE 5 OF 5 ASSESSEE I.E. FROM DSIR THE AO SHALL GRANT DEDUCT ION U/S 35(2AB) OF THE ACT IN ACCORDANCE WITH LAW. 6. IN THE RESULT ASSESSEES APPEAL IS TREATED AS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MARCH 2021. SD/- SD/- (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD DATED 3 RD MARCH 2021. VINODAN/SPS COPY TO: 1 KN BIOSCIENCES INDIA P LTD C/O M/S SEKHAR & SURES H 133/4 RP ROAD SECUNDERABAD 500003 2 ACIT CIRCLE 2(1) SIGNATURE TOWERS KONDAPUR HYD ERABAD 3 CIT (A)-2 HYDERABAD 4 PR. CIT 2 HYDERABAD 5 THE DR ITAT HYDERABAD 6 GUARD FILE BY ORDER