Joint Commissioner Of Income Tax, Special Range - 4, Bangalore v. M/s. Mahindra Electric Vehicles Limited, Bangalore

ITA 2252/BANG/2019 | 2012-2013
Pronouncement Date: 03-03-2021 | Result: Dismissed

Appeal Details

RSA Number 225221114 RSA 2019
Assessee PAN AABCR2858R
Bench Bangalore
Appeal Number ITA 2252/BANG/2019
Duration Of Justice 1 year(s) 4 month(s) 6 day(s)
Appellant Joint Commissioner Of Income Tax, Special Range - 4, Bangalore
Respondent M/s. Mahindra Electric Vehicles Limited, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 03-03-2021
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 03-03-2021
Date Of Final Hearing 03-03-2021
Next Hearing Date 03-03-2021
Last Hearing Date 18-08-2020
First Hearing Date 27-01-2021
Assessment Year 2012-2013
Appeal Filed On 25-10-2019
Judgment Text
ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: BANGALORE BEFORE SHRI CHANDRA POOJARI ACCOUNTANT MEMBER AND SMT. BEENA PILLAI JUDICIAL MEMBER ITA NO.2252/BANG/2019 ASSESSMENT YEAR: 2012 13 JCIT SPECIAL RANGE-4 BENGALURU VS. MAHINDRA ELECTRIC VEHICLES LTD. 66 TO 69 72 TO 76 MEML BOMMASANDRA INDUSTRIAL AREA BOMMASANDRA BANGALORE 560 099 PAN NO.AABCR 2858R APPELLANT RESPONDENT APPELLANT BY : SHRI MATHIVANAN D.R. RESPONDENT BY : SHRI PANKAJ SANGHVI A.R. DATE OF HEARING : 03.03.2021 DATE OF PRONOUNCEMENT : 03.03.2021 O R D E R PER CHANDRA POOJARI ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) BENGALURU DATED 8.8.2019 FOR THE A.Y. 2012-13. THE GROUNDS FILED IN THE APPEAL OF THE REVENUE ARE AS FOLLOWS: 1. THE ORDER OF THE LD. CIT(A)-4 BANGALORE IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE IS OPPOSED TO LAW A ND THE FACT AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LD. CIT(A) HAS COMMITTED AN ERROR IN LAW A ND IN FACT BY NOT APPRECIATING THE FACT THAT NON-SUBMISSION OF FORM 3 CL TO THE PRESCRIBED AUTHORITY WILL DISENTITLE THE ASSESSEE F ROM CLAIMING DEDUCTION U/S 35(2AB). ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU PAGE 2 OF 9 3. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT T HE ASSESSEE BY NOT SUBMITTING THE FORM 3CL TO THE PRESCRIBED AUTHORITY HAS ACTUALLY ATTEMPTED TO MISLEAD THE REVENUE IN CLAIMING THE SO CALLED DEDUCTION U/S 35(2AB) AND BY ITS CONDUCT IT HAS INDULGED IN FURNISHING INACCURATE PARTICULARS OF INCOME. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING IT IS PRAYED THAT THE ORDER OF CIT(A) IS SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND THAT OF ASSESSING OFFIC ER MAY BE RESTORED. 5. THE APPELLANT CRAVES THE RIGHT TO ADD ALTER AMEND AND/OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E M/S. MAHINDRA REVA ELECTRIC VEHICLES LIMITED HAS FILED THIS APPEA L ON 20.4.2017 FOR THE ASSESSMENT YEAR 2012-13 AGAINST THE ORDER OF DE PUTY COMMISSIONER OF INCOME-TAX CIRCLE 4(1)(2) BANGALOR E DTED 27.3.2017 PASSED U/S 271(1)(C) OF THE INCOME-TAX A CT 1961 ['THE ACT' FOR SHORT]. AS PER DECLARATION IN FORM NO.35 THE DATE OF SERVICE OF THE IMPUGNED ORDER AND THE DEMAND NOTICE IS STATED TO BE 7.4.2017. IN VIEW OF THIS THE APPEAL WHICH HAS BEEN INSTITUT ED ON 20.4.2017 IS FOUND TO BE IN TIME. THE ASSESSEE IS A COMPANY ENG AGED IN THE BUSINESS OF MANUFACTURING BATTERY OPERATED COMMERCI AL VEHICLES. FOR THE A.Y. 2012-13 ASSESSEE FILED THE RETURN OF INCOME ON 27.9.2012 DECLARING A LOSS OF RS.60 91 71 433/- AFT ER CLAIMING WEIGHED DEDUCTION OF RS.35 82 45 470/- U/S 35(2AB) OF THE ACT BEING EXPENDITURE ON SCIENTIFIC RESEARCH AND IN HOUSE RES EARCH AND DEVELOPMENT FACILITY WHICH IS 200% OF THE ACTUAL EX PENDITURE OF RS.17 91 22 735/-. THE RETURN WAS PROCESSED U/S 14 3(1). SUBSEQUENTLY THE CASE WAS TKEN UP FOR REGULAR ASSE SSMENT UNDER SECTION 143(3) OF THE ACT. THE A.O. COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ON 27.2.2015 DETERMINING THE TOTA L LOSS OF RS.43 00 48 699/- AFTER MAKING DISALLOWANCE IN DEDU CTION CLAIMED U/S 35(2AB). THE ASSESSEE PREFERRED AN APPEAL BEFO RE CIT(A) AGAINST ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU PAGE 3 OF 9 THE ORDER OF THE A.O. DATED 27.2.2015. THE CIT(A) UPHELD ACTION OF THE A.O. CONFIRMED THE ASSESSMENT ORDER DATED 27.2. 2015. CONSEQUENTLY THE A.O. INITIATED PENALTY PROCEEDING S U/S 271(1)(C) OF THE ACT AND LEVIED A PENALTY OF RS.11 00 00 000/-. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE THE LD. CIT(A). 3. AT THE TIME OF HEARING IT WAS BROUGHT TO OUR NO TICE THAT THE ASSESSEE WENT IN APPEAL BEFORE THE TRIBUNAL IN ITA NO.641/BANG/2017 THAT TRIBUNAL VIDE ORDER DATED 14. 9.2018 HAS ALLOWED THE APPEAL OF THE ASSESSEE ON QUANTUM ADDIT ION BY OBSERVING AS FOLLOWS: 13. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LEARNED D R RELIED ON THE ORDER OF THE AO/CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED SUBMISSIONS AS WERE MADE BEFORE THE REVENUE AUTHORI TIES AND PLACED RELIANCE ON SOME JUDICIAL PRECEDENTS ON IDENTICAL I SSUE RENDERED BY VARIOUS BENCHES OF ITAT AND HON'BLE HIGH COURTS. 14. FOR AY 2012-13 THE PREVIOUS YEAR IS FY 2011-12 I. E. THE PERIOD FROM 1.4.2011 TO 31.3.2012. THE FACTS ON REC ORD GO TO SHOW THAT THE ASSESSEE'S IN-HOUSE R & D FACILITIES WAS APPROV ED BY THE DSIR GOVT. OF INDIA MINISTRY OF SCIENCE AND TECHNOLOGY FOR AY 2012-13 VIDE THEIR LETTER DATED 20.5.2009 A COPY OF WHICH IS PL ACED AT PAGE 30 OF THE ASSESSEES PAPER BOOK. THE APPROVAL IS FOR THE PERI OD 1.4.2009 UP TO 31.3.2012. THEREFORE THE CONDITION FOR ALLOWING DE DUCTION U/S.35(2AB) OF THE ACT HAS BEEN FULFILLED BY THE ASSESSEE. THE CLA IM OF THE REVENUE HOWEVER IS THAT THE APPROVAL BY THE PRESCRIBED AUT HORITY IN FORM NO.3CM IS NOT FINAL AND CONCLUSIVE AND THE QUANTUM OF EXPE NDITURE ON WHICH DEDUCTION IS TO BE ALLOWED IS TO BE CERTIFIED BY DS IR IN FORM NO.3CL. THERE IS NO STATUTORY PROVISION IN THE ACT WHICH LAYS DOW N SUCH A CONDITION. WE SHALL THEREFORE EXAMINE WHAT IS FORM NO.3CL. 15. DSIR HAS FRAMED GUIDELINES FOR APPROVAL U/S.35 (2AB) OF THE ACT. THE GUIDELINES AS ON MAY 2010 WHICH IS RELEVANT FO R AY 2012-13 IN SO FAR AS IT IS RELEVANT FOR THE PRESENT APPEAL WAS AS GI VEN BELOW. (I) AS PER GUIDELINE 5 (IV) OF THE GUIDELINES SO FRAMED EVERY COMPANY WHICH HAS OBTAINED AN APPROVAL FROM THE PRESCRIBED AUTHORITY SHOULD ALSO SUBMIT AN UNDERTAKING AS PER PART C OF FORM NO . 3CK TO MAINTAIN SEPARATE ACCOUNTS FOR EACH R&D CENTRE APPROVED UNDE R SECTION 35(2AB) BY THE PRESCRIBED AUTHORITY AND TO GET THE ACCOUNTS DULY AUDITED EVERY YEAR BY AN AUDITOR AS DEFINED IN SUBS ECTION (2) OF SECTION ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU PAGE 4 OF 9 288 OF THE IT ACT 1961. (THE STATUTORY AUDITORS OF THE COMPANY SHOULD AUDIT THE R&D ACCOUNTS. TO FACILITATE THIS AUDIT SE PARATE BOOKS OF ACCOUNTS FOR R&D SHOULD BE MAINTAINED. ALSO THE ST ATUTORY AUDITORS SHOULD SIGN THE AUDITORS' CERTIFICATE IN THE DETAIL S REQUIRED TO BE SUBMITTED AS PER ANNEXURE-IV OF THE GUIDELINES TO F ACILITATE SUBMISSION OF REPORT IN FORM 3CL). (II) AS PER GUIDELINE 5(VI) OF THE GUIDELINES THE AUDIT ED ACCOUNTS FOR EACH YEAR MAINTAINED SEPARATELY FOR EACH APPROVED C ENTRE SHALL BE FURNISHED TO THE SECRETARY DEPARTMENT OF SCIENTIFI C & INDUSTRIAL RESEARCH BY 31ST DAY OF OCTOBER OF THE SUCCEEDING Y EAR ALONG WITH INFORMATION AS PER ANNEXURE-IV OF THE GUIDELINES. (III) AS PER GUIDELINE 5(IX) EXPENDITURES WHICH ARE DIRE CTLY IDENTIFIABLE WITH APPROVED R&D FACILITY ONLY SHALL BE ELIGIBLE FOR THE WEIGHTED TAX DEDUCTION. HOWEVER EXPENDITURE IN R&D ON UTILITIES WHICH ARE SUPPLIED FROM A COMMON SOURCE WHICH ALSO SERVIC ES AREAS OF THE PLANT OTHER THAN R&D MAY BE ADMISSIBLE PROVIDED TH EY ARE METERED/MEASURED AND SUBJECT TO CERTIFICATION BY A CHARTERED ACCOUNTANT. (IV) AS PER GUIDELINE 5(X) EXPENDITURE ON MANPOWER FROM DEPARTMENTS OTHER THAN R&D CENTRE SUCH AS MANUFAC TURING QUALITY CONTROL TOOL ROOM ETC. INCURRED ON SUCH FUNCTIONS AS ATTENDING MEETINGS PROVIDING ADVICE/DIRECTIONS ASCERTAINING CUSTOMER CHOICE/RESPONSE TO NEW PRODUCTS UNDER DEVELOPMENT A ND OTHER LIAISON WORK SHALL NOT QUALIFY FOR DEDUCTION UNDER SECTION 35(2AB) OF I.T. ACT 1961. (V) AS PER GUIDELINE 10 DOCUMENTS REQUIRED TO BE SUBMIT TED BY 31ST OCTOBER OF EACH SUCCEEDING YEAR OF APPROVED PE RIOD TO FACILITATE SUBMISSION OF REPORT IN FORM 3CL (2 SETS ) ARE COMPLETE DETAILS AS PER ANNEXURE-IV OF DSIR GUIDELINES. 16. THE ASSESSEE APPLIED FOR ISSUE OF FORM NO.3CL TO TH E APPROPRIATE AUTHORITY ON 24.3.2017 AFTER THE ORDER OF THE CIT( A). THE APPLICATION SO MADE BY THE ASSESSEE IS AT PAGE 43 TO 65 OF THE ASSESSEE'S PAPER BOOK. ACCORDING TO THE ASSESSEE IT HAS COMPLIED WITH ALL THE REQUIREMENTS OF THE GUIDELINES FOR ISSUE OF FORM NO.3CL BUT THE DS IR HAS ISSUED FORM NO.3CL DATED 5.4.2018 FOR AY 2014 & 15 & 2015-16 BU T NO FORM NO.3CL WAS ISSUED FOR AY 2012-13. THOUGH THERE HAS BEEN NO COMMUNICATION TO THE ASSESSEE IN THIS REGARD THE L EARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE THE AUDITED ACCOU NTS WERE NOT SUBMITTED BY 31ST OCTOBER OF THE SUCCEEDING AY AS IS REQUIRED UNDER ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU PAGE 5 OF 9 GUIDELINE 5 (VI) THE ASSESSEE'S APPLICATION WOULD NOT HAVE BEEN CONSIDERED BY THE DSIR. 17. RULE-6(7A)(B) OF THE RULES SPECIFYING THE PRESCRIBE D AUTHORITY AND CONDITIONS FOR CLAIMING DEDUCTION U/S.35(2AB) OF TH E ACT HAS BEEN AMENDED BY THE INCOME TAX (10T H AMENDMENT) RULES 2016 W.E.F. 1.7.2016 WHEREBY IT HAS BEEN LAID DOWN THAT THE PR ESCRIBED AUTHORITY I.E. DSIR SHALL QUANTIFY THE QUANTUM OF DEDUCTION TO BE ALLOWED TO AN ASSESSEE U/S.35(2AB) OF THE ACT. PRIOR TO SUCH SUBS TITUTION THE ABOVE PROVISIONS MERELY PROVIDED THAT THE PRESCRIBED AUTH ORITY SHALL SUBMIT ITS REPORT IN RELATION TO THE APPROVAL OF INHOUSE R&D F ACILITY IN FORM NO.3CL TO THE DGIT (EXEMPTION) WITHIN 60 DAYS OF GR ANTING APPROVAL. THEREFORE PRIOR TO 1.7.2016 THERE WAS LEGAL SANCTIT Y FOR FORM NO.3CL IN THE CONTEXT OF ALLOWING DEDUCTION U/S.35(2AB) OF THE AC T. 18. THE ISSUE AS TO WHETHER DEDUCTION U/S.35(2AB) O F THE ACT CAN BE DENIED FOR ABSENCE OF FORM NO.3CL BY THE DSIR WAS SUBJECT MATTER OF SEVERAL JUDICIAL DECISIONS RENDERED BY VARIOUS BENCHES OF ITAT. (I) THE PUNE ITAT IN THE CASE OF CUMMINS INDIA LTD. VS. DCIT IN ITA NO.309/PUN/2014 FOR AY 2009-10 ORDER DATED 15.5.201 8 HAD AN OCCASION TO CONSIDER A CASE WHERE PART OF THE CLAIM FOR DEDUCTION U/S.35(2AB) OF THE ACT WAS CLAIMED SUPPORTED BY FOR M NO.3CL BUT PART OF IT WAS NOT SUPPORTED BY FORM NO.3CL. THE PU NE ITAT HELD AS FOLLOWS:- '45. THE ISSUE WHICH IS RAISED IN THE PRESENT APPEAL IS THAT WHETHER WHERE THE FACILITY HAS BEEN RECOGNIZED AND NECESSARY CERTIFICATION IS ISSUED BY THE PRESCRIBED AUTHORITY THE ASSESSEE CAN AVAIL THE DEDUCTION IN RESPECT OF EXPENDITURE I NCURRED ON IN- HOUSE R&D FACILITY FOR WHICH THE ADJUDICATING AUTH ORITY IS THE ASSESSING OFFICER AND WHETHER THE PRESCRIBED AUTHOR ITY IS TO APPROVE EXPENDITURE IN FORM NO.3CL FROM YEAR TO YEA R. LOOKING INTO THE PROVISIONS OF RULES IT STIPULATES THE FIL ING OF AUDIT REPORT BEFORE THE PRESCRIBED AUTHORITY BY THE PERSONS AVAI LING THE DEDUCTION UNDER SECTION 35(2AB) OF THE ACT BUT THE PROVISIONS OF THE ACT DO NOT PRESCRIBE ANY METHODOLOGY OF APPROVA L TO BE GRANTED BY THE PRESCRIBED AUTHORITY VIS--VIS EXPEN DITURE FROM YEAR TO YEAR. THE AMENDMENT BROUGHT IN BY THE IT (T ENTH AMENDMENT) RULES W.E.F. 01.07.2016 WHEREIN SEPARAT E PART HAS BEEN INSERTED FOR CERTIFYING THE AMOUNT OF EXPENDIT URE FROM YEAR TO YEAR AND THE AMENDED FORM NO.3CL THUS LAYS DOWN THE PROCEDURE TO BE FOLLOWED BY THE PRESCRIBED AUTHORIT Y. PRIOR TO THE AFORESAID AMENDMENT IN 2016 NO SUCH PROCEDURE I METHODOLOGY WAS PRESCRIBED. IN THE ABSENCE OF THE T HERE IS NO MERIT IN THE ORDER OF ASSESSING OFFICER IN CURTAILI NG THE EXPENDITURE AND CONSEQUENT WEIGHTED DEDUCTION PRESC RIBED ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU PAGE 6 OF 9 AUTHORITY HAS ONLY APPROVED PART OF EXPENDITURE IN FORM NO.3CL. WE FIND NO MERIT IN THE SAID ORDER OF AUTHORITIES B ELOW. 46. THE COURTS HAVE HELD THAT FOR DEDUCTION UNDER S ECTION 35(2AB) OF THE ACT FIRST STEP WAS THE RECOGNITION OF FACILITY BY THE PRESCRIBED AUTHORITY AND ENTERING AN AGREEMENT BETWEEN THE FACILITY AND THE PRESCRIBED AUTHORITY. ONCE SUCH AN AGREEMENT HAS BEEN EXECUTED UNDER WHICH RECOGNITION HAS BEEN GIVEN TO THE FACILITY THEN THEREAFTER THE ROLE OF ASSESSING OFFICER IS TO LOOK INTO AND ALLOW THE EXPENDITURE INCURRED ON IN- HOUSE R&D FACILITY AS WEIGHTED DEDUCTION UNDER SECTION 35(2AB ) OF THE ACT. ACCORDINGLY WE HOLD SO. THUS WE REVERSE THE ORDER OF ASSESSING OFFICER IN CURTAILING THE DEDUCTION CLAIM ED UNDER SECTION 35(2AB) OF THE ACT BY Z 6 75 000/-. THUS G ROUNDS OF APPEAL NO.10.1 10.2 AND 10.3 ARE ALLOWED.' (II) THE HYDERABAD ITAT IN THE CASE OF M/S. SRI B IOTECH LABORATORIES INDIA LTD. VS. ACIT ITA NO.385/HYD/2014 FOR AY 2009-10 OR DER DATED 24.9.2014 TOOK THE VIEW (VIDE PARAGRAPH-13 OF THE O RDER) THAT WHEN THE ASSESSEE'S R & D FACILITY IS APPROVED THE DEDUCTION U/S.35(2AB) OF THE ACT CANNOT BE DENIED MERELY ON THE GROUND THAT PRES CRIBED AUTHORITY HAS NOT SUBMITTED REPORT IN FORM 3CL. 19. THE QUESTION OF ALLOWING DEDUCTION U/S.35(2AB) OF THE ACT WAS CONSIDERED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SADAN VIKAS (INDIA) LTD. (2011) 335 ITR 117 (DEL) WHERE AO REFUSED TO A CCORD THE BENEFIT OF THE WEIGHTED DEDUCTION TO THE ASSESSEE UNDER S. 35(2AB) ON THE GROUND THAT RECOGNITION AND APPROVAL WAS GIVEN BY THE DSIR IN F EBRUARY/SEPTEMBER 2006 I.E. IN THE NEXT ASSESSMENT YEAR AND THEREF ORE THE WEIGHTED DEDUCTION CANNOT BE ALLOWED. THE CIT(A) FIRMED THE ORDER OF T HE AO. THE TRIBUNAL HELD THAT THE ASSESSEE WOULD BE ENTITLED TO WEIGHTED DED UCTIONS OF THE AFORESAID EXPENDITURE INCURRED BY THE ASSESSEE IN TERMS OF TH E S. 35(2AB) OF THE ACT AND IN COMING TO THIS CONCLUSION THE TRIBUNAL RELIED U PON THE JUDGMENT OF GUJARAT HIGH COURT IN CIT VS. CLARIS LIFESCIENCES LTD. 326 ITR 251 (GUJ). IN ITS DECISION THE HON'BLE GUJARAT HIGH COURT HELD THAT T HE CUT-OFF DATE MENTIONED IN THE CERTIFICATE ISSUED BY THE DSIR WOULD BE OF N O RELEVANCE. WHAT IS TO BE SEEN IS THAT THE ASSESSEE WAS IN INDULGING IN R&D A CTIVITY AND HAD INCURRED THE EXPENDITURE THEREUPON. ONCE A CERTIFICATE BY DS IR IS ISSUED THAT WOULD BE SUFFICIENT TO HOLD THAT THE ASSESSEE FULFILS THE CONDITIONS LAID DOWN IN THE AFORESAID PROVISIONS. THE HON'BLE DELHI HIGH COURT FOLLOWED THE DECISION OF THE HON'BLE GUJARAT HIGH COURT AND UPHELD THE DECIS ION OF THE TRIBUNAL. THE HON'BLE DELHI HIGH COURT QUOTED THE FOLLOWING OBSER VATIONS OF THE HON'BLE GUJARAT HIGH COURT AND AGREED WITH THE SAID VIEW: '7. ... THE LOWER AUTHORITIES ARE READING MORE THAN WHAT IS PROVIDED BY LAW. A PLAIN AND SIMPLE READING OF THE ACT PROVIDES THAT ON APPROVAL OF THE RESEARCH AND DEVELOPMENT FACILITY EXPENDITURE SO INCURRED IS ELIGIBLE FOR WEIGHTED DEDUCTION. ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU PAGE 7 OF 9 8. THE TRIBUNAL HAS CONSIDERED THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE AND TOOK THE VIEW THAT SECTION SPEAKS OF : (I) DEVELOPMENT OF FACILITY; (II) INCURRING OF EXPENDITURE BY THE ASSESSEE FOR DEVELO PMENT OF SUCH FACILITY; (III) APPROVAL OF THE FACILITY BY THE PRESCRIBED AUTHORIT Y WHICH IS DSIR; AND (IV) ALLOWANCE OF WEIGHTED DEDUCTION ON THE EXPENDITURE SO INCURRED BY THE ASSESSEE. 9. THE PROVISIONS NOWHERE SUGGEST OR IMPLY THAT RES EARCH AND DEVELOPMENT FACILITY IS TO BE APPROVED FROM A PARTI CULAR DATE AND IN OTHER WORDS IT IS NOWHERE SUGGESTED THAT DATE OF APPROVA L ONLY WILL BE CUT-OFF DATE FOR ELIGIBILITY OF WEIGHTED DEDUCTION ON THE E XPENSES INCURRED FROM THAT DATE ONWARDS. A PLAIN READING CLEARLY MANIFEST S THAT THE ASSESSEE HAS TO DEVELOP FACILITY WHICH PRESUPPOSES INCURRIN G EXPENDITURE IN THIS BEHALF APPLICATION TO THE PRESCRIBED AUTHORIT Y WHO AFTER FOLLOWING PROPER PROCEDURE WILL APPROVE THE FACILITY OR OTHER WISE AND THE ASSESSEE WILL BE ENTITLED TO WEIGHTED DEDUCTION OF ANY AND A LL EXPENDITURE SO INCURRED. THE TRIBUNAL HAS THEREFORE COME TO THE CONCLUSION THAT ON PLAIN READING OF S. ITSELF THE ASSESSEE IS ENTITLE D TO WEIGHTED DEDUCTION ON EXPENDITURE SO INCURRED BY THE ASSESSEE FOR DEVE LOPMENT OF FACILITY. THE TRIBUNAL HAS ALSO CONSIDERED R. 6(5A) AND FORM NO. 3CM AND COME TO THE CONCLUSION THAT A PLAIN AND HARMONIOUS READING OF RULE AND FORM CLEARLY SUGGESTS THAT ONCE FACILITY IS AP PROVED THE ENTIRE EXPENDITURE SO INCURRED ON DEVELOPMENT OF R&D FACI LITY HAS TO BE ALLOWED FOR WEIGHTED DEDUCTION AS PROVIDED BY S. 35(2AB). THE TRIBUNAL HAS ALSO CONSIDERED THE LEGISLATIVE INTENTION BEHIN D ABOVE ENACTMENT AND OBSERVED THAT TO BOOST UP RESEARCH AND DEVELOPMENT FACILITY IN INDIA THE LEGISLATURE HAS PROVIDED THIS PROVISION TO ENCOURAG E THE DEVELOPMENT OF THE FACILITY BY PROVIDING DEDUCTION OF WEIGHTED EXP ENDITURE. SINCE WHAT IS STATED TO BE PROMOTED WAS DEVELOPMENT OF FACILIT Y INTENTION OF THE LEGISLATURE BY MAKING ABOVE AMENDMENT IS VERY CLEAR THAT THE ENTIRE EXPENDITURE INCURRED BY THE ASSESSEE ON DEVELOPMENT OF FACILITY IF APPROVED HAS TO BE ALLOWED FOR THE PURPOSE OF WEIG HTED DEDUCTION.' 20.FROM THE ABOVE DISCUSSION IT IS CLEAR THAT PRIOR TO 1.7.2016 FORM 3CL HAD NO LEGAL SANCTITY AND IT IS ONLY W.E.F 1.7.2016 WITH T HE AMENDMENT TO RULE 6(7A)(B) OF THE RULES THAT THE QUANTIFICATION OF THE WEIGHTED DEDUCTION U/S.35(2AB) OF THE ACT HAS SIGNIFICANCE. IN THE PRESENT CASE THERE IS NO D IFFICULTY ABOUT THE QUANTUM OF DEDUCTION U/S.35(2AB) OF THE ACT BECAUSE THE AO AL LOWED 100% OF THE EXPENDITURE AS DEDUCTION U/S.35(2AB)(1)(I) OF THE ACT AS EXPEN DITURE ON SCIENTIFIC RESEARCH. DEDUCTION U/S.35(1)(I) AND SEC.35(2AB) OF THE ACT A RE SIMILAR EXCEPT THAT THE DEDUCTION U/S.35(2AB) IS ALLOWED AS WEIGHTED DEDUCT ION AT 200% OF THE EXPENDITURE WHILE DEDUCTION U/S.35(1)(I) IS ALLOWED ONLY AT 100 %. THE CONDITIONS FOR ALLOWING ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU PAGE 8 OF 9 DEDUCTION U/S 35(1)(I) OF THE ACT AND UNDER SEC.35 (2AB) OF THE ACT ARE IDENTICAL WITH THE ONLY DIFFERENCE BEING THAT THE ASSESSEE CLAIMIN G DEDUCTION U/S 35(2AB) OF THE ACT SHOULD BE ENGAGED IN MANUFACTURE OF CERTAIN ART ICLES OR THINGS. IT IS NOT IN DISPUTE THAT THE ASSESSEE IS ENGAGED IN BUSINESS TO WHICH SEC.35(2AB) OF THE ACT APPLIED. THE OTHER CONDITION REQUIRED TO BE FUL FILLED FOR CLAIMING DEDUCTION U/S.35(2AB) OF THE ACT IS THAT THE RESEAR CH AND DEVELOPMENT FACILITY SHOULD BE APPROVED BY THE PRESCRIBED AUTHORITY. THE PRESCRIBED AUTHORITY IS THE SECRETARY DEPARTMENT OF SCIENTIFIC INDUSTRIAL RESEARCH GOVT. OF INDIA (DSIR). IT IS NOT IN DISPUTE THAT THE ASSESSEE IN T HE PRESENT CASE OBTAINED APPROVAL IN FORM NO.3CM AS REQUIRED BY RULE 6 (5A) OF THE RULES. IN THESE FACTS AND CIRCUMSTANCES AND IN THE LIGHT OF THE JUD ICIAL PRECEDENTS ON THE ISSUE WE ARE OF THE VIEW THAT THE DEDUCTION U/S.35 (2AB) OF THE ACT OUGHT TO HAVE BEEN ALLOWED AS WEIGHTED DEDUCTION AT 200% OF THE EXPENDITURE AS CLAIMED BY THE ASSESSEE AND OUGHT NOT TO HAVE BEEN RESTRICTED TO 100% OF THE EXPENDITURE INCURRED ON SCIENTIFIC RESEARCH. WE HOL D AND DIRECT ACCORDINGLY AND ALLOW THE APPEAL OF THE ASSESSEE. 21. IN THE RESULT APPEAL BY THE ASSESSEE IS ALLOWE D. 4. SINCE THE QUANTUM ADDITION IS ALSO DELETED BY TH E TRIBUNAL THERE IS NO QUESTION OF LEVYING OF ANY PENALTY AND THE CIT(A) HAS RIGHTLY DELETED THE PENALTY ON THE BASIS OF THE ORD ER OF THE TRIBUNAL OF QUANTUM ADDITIONS. ACCORDINGLY WE CONFIRM THE FIN DING OF LD. CIT(A) IN DELETING THE PENALTY. 5. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD MAR 2021 SD/- (BEENA PILLAI) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER BANGALORE DATED 3 RD MAR 2021. VG/SPS ITA NO.2252/BANG/2019 M/S. MAHINDRA ELECTRIC VEHICLES LTD. BENGALURU PAGE 9 OF 9 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR ITAT BANGALORE.