M/s Parabolic Drugs Limited, Chandigarh v. DCIT, Chandigarh

ITA 242/CHANDI/2015 | 2009-2010
Pronouncement Date: 07-10-2016 | Result: Allowed

Appeal Details

RSA Number 24221514 RSA 2015
Assessee PAN AACCP1419K
Bench Chandigarh
Appeal Number ITA 242/CHANDI/2015
Duration Of Justice 1 year(s) 6 month(s) 28 day(s)
Appellant M/s Parabolic Drugs Limited, Chandigarh
Respondent DCIT, Chandigarh
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 07-10-2016
Date Of Final Hearing 21-09-2016
Next Hearing Date 21-09-2016
Assessment Year 2009-2010
Appeal Filed On 09-03-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH CHANDIGARH BEFORE SHRI BHAVNESH SAINI JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA ACCOUNTANT MEMBER ITA NOS.242 & 243/CHD/2015 (ASSESSMENT YEARS : 2009-10 & 2010-11) M/S PARABOLIC DRUGS LTD. VS. THE D.C.I.T. SCO 99-100 SECTOR 17B CENTRAL CIRCLE-1 CHANDIGARH. CHANDIGARH. PAN: AACCP1419K (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SUDHIR SEHGAL DEPARTMENT BY : SHRI SUSHIL KUMAR CIT DR DATE OF HEARING : 27.09.2016 DATE OF PRONOUNCEMENT : 07.10.2016 O R D E R PER ANNAPURNA GUPTA A.M . : THESE TWO APPEALS ARE DIRECTED AGAINST SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME TAX (APPEA LS)-3 GURGAON DATED 16.12.2014 FOR ASSESSMENT YEARS 2009 -10- AND 2010-11 IN THE CASE OF THE SAME ASSESSEE.SINCE IDENTICAL ISSUE IS INVOLVED IN ALL THE APPEALS THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS C OMMON ORDER. FOR THE SAKE OF CONVENIENCE WE SHALL BE DEALING WIT H THE APPEAL IN ITA NO.242/CHD/2015 RELATING TO AY 2 009- 2010. 2 2. THE BRIEF FACTS RELATING TO THE CASE ARE THAT T HE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING OF BUL K DRUGS AND FINE CHEMICALS. SEARCH UNDER SECTION 132 OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) WAS CONDUCTED ON THE ASSESSEE ON 17.09.2010 AND IN RESP ONSE TO NOTICE UNDER SECTION 153A OF THE ACT THE ASSESS EE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.9 44 78 080/- AFTER CLAIMING WEIGHTED DEDUCTION OF EXPENDITURE INCURRED ON IN-HOUSE SCIENTIFIC RESEARC H & DEVELOPMENT UNDER SECTION 35(2AB) OF THE ACT AMOUN TING TO RS.18 86 68 086/-. ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS.28 32 49 660/- DENYING THE ASS ESSEES CLAIM FOR WEIGHTED DEDUCTION UNDER SECTION 35(2AB) IN THE ABSENCE OF STATUTORY APPROVAL OF THE EXPENDITURE FR OM THE PRESCRIBED AUTHORITY. ACCORDINGLY THE ASSESSING O FFICER MADE SUBSTANTIVE ADDITION OF RS.11 31 49 726/- ON ACCOUNT OF WEIGHTED DEDUCTION OF CAPITAL EXPENDITUR E AND EXCESS WEIGHTED DEDUCTION ON REVENUE EXPENDITURE CL AIMED U/S 35(2AB) BY THE ASSESSEE. FURTHER THE AO MADE PROTECTIVE ADDITION OF 100% OF THE REVENUE EXPENDIT URE AMOUNTING TO RS.7 55 18 360/- ALTERNATIVELY CLAIM ED BY THE ASSESSEE UNDER SECTION 37(1) OF THE ACT BY ST ATING THAT THOUGH THE HONBLE ITAT HAD ALLOWED IDENTICAL CLAIM IN AY 2006-07 THE REVENUE HAD FILED APPEAL AGAINST THE SAME IN THE HIGH COURT AND SUBSTANTIVE ADDITION WOU LD BE MADE IF THE APPEAL WAS ALLOWED. 3 3. DURING APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT (APPEALS) THE ASSESSEE SUBMITTED THE STATUTORY APPROVAL IN FORM.NO.3CL AS ADDITIONAL EVIDENCE AND PLEADED ADMITTANCE OF THE SAME SINCE IT WAS RECEIV ED LATE BY THE ASSESSEE I.E AFTER COMPLETION OF ASSESSMENT THEREBY PREVENTING THE ASSESSEE TO SUBMIT THE SAME DURING ASSESSMENT PROCEEDINGS. THE LEARNED CIT (APPEALS) REFUSED TO ADMIT THE ADDITIONAL EVIDENCE BY HOLDING THAT THE ASSESSEE WAS NOT ABLE TO PROVE THA T THE DELAY IN OBTAINING REQUISITE CERTIFICATE WAS NOT ATTRIBUTABLE TO IT. THEREAFTER THE LEARNED CIT (AP PEALS) UPHELD THE DISALLOWANCE OF EXCESS WEIGHTED DEDUCTIO N ON BOTH CAPITAL AND REVENUE EXPENDITURE INCURRED WHILE THE ACTUAL REVENUE EXPENDITURE WAS ALLOWED SINCE THE GENUINENESS OF THE EXPENDITURE WAS NOT DISPUTED. A S FOR THE CAPITAL EXPENDITURE INCURRED THE DISALLOWANCE OF THE SAME WAS ALSO UPHELD AFTER REJECTING THE ASSESSEES ALTERNATIVE CLAIM OF THE SAME UNDER SECTION 35(1)(I V) OF THE ACT IN THE ABSENCE OF ANY EXPLANATION GIVEN BY THE ASSESSEE OF THE MANNER OF USAGE OF THE SAME AND ALS O SINCE THE MATTER WAS NOT CONSIDERED BY THE I.T.A.T. IN THE ASSESSEES CASE FOR ASSESSMENT YEAR 2006-07 AND HEN CE WAS HELD BY THE LD CIT(A) TO BE NOT COVERED BY THAT DECISION. 4. AGGRIEVED BY THE SAME THE ASSESSEE HAS COME UP IN APPEAL BEFORE US CHALLENGING THE ACTION OF T HE LD.CIT(A) IN DENYING THE ASSESSEES CLAIM OF WEIGHTE D 4 DEDUCTION U/S 35(2AB) OF THE ACT BY REJECTING THE ADDITIONAL EVIDENCE FILED BY IT AS ALSO DENYING TH E ALTERNATIVE CLAIM OF THE ASSESSEE OF CAPITAL EXPEND ITURE INCURRED ON RESEARCH AND DEVELOPMENT U/S 35(1)(IV) OF THE ACT. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1. THAT THE ORDER OF LD. COMMISSIONER ON INCOME (A PPEAL) (CENTRAL) GURGAON IS CONTRARY TO THE FACTS OF THE CASE AND LEGALLY INCORRECT AND WITHOUT ANY BASIS OF PROP ER JUSTIFICATION. 2. THE LD. CIT (A) HAS ERRED IN UPHOLDING ADDITION ON SUBSTANTIVE BASIS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEDUCTION U/S 35(2AB). THE LD. CIT(A) HA S NOT CONSIDERED THE FACTS FOR DISALLOWING THE WEIGHT ED DEDUCTION U/S 35 (2AB) BUT ON THE BASIS OF RECOGNITION FROM DSIR IS PENDING WHICH IS OUT OF CONTROL OF THE ASSESSEE. THE ASSESSEE HAD DULY COMPLIED WITH ALL THE FORMALITIES AS MENTIONED IN SECTION 35( 2AB). HOWEVER THE REPORT IN FORM NO. 3 CL WAS RECEIVED BY THE ASSESSEE ON 25/09/2013 (AFTER COMPLETION OF ASSESSMENT AND FILLING OF PRESENT APP EAL). A SEPARATE REQUEST LETTER TO ADMIT THE SAME AS ADDITIONAL EVIDENCE WAS ALREADY SUBMITTED DATED 4 TH OCTOBER 2013 VIA FAX. DSIR IN ITS FORM 3CL RECOGNIZED RS.3 51 19 000/- AS CAPITAL EXPENDITURE AND THE SAME IS ELIGIBLE FOR WEIGHTED DEDU CTION @150% (I.E.5 26 78 500/-). 3. THE LD. CIT (A) HAS ERRED IN UPHOLDING ADDITION TO THE EXTENT OF RS.1 51 41 364/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEDUCTION UNDER SECTION 35 (2 AB) WITHOUT ALLOWING CORRESPONDING DEDUCTION U/S 35(1 )(IV). THE LD. CIT (A) HAS NOT CONSIDERED THE FACTS FOR DISALLOWING THE WEIGHTED DEDUCTION U/S 35 (2AB) BU T ON THE BASIS OF NON RECOGNITION FROM DSIR. IF THE AMOUNT IS NOT ELIGIBLE FOR WEIGHTED DEDUCTION U/S 35(2AB) IT CAN BE ELIGIBLE FOR DEDUCTION U/S 35(1 )(IV). 5 4. THE LD. CIT (A) HAS ERRED IN UPHOLDING ADDITION OF RS.3 77 59 180/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DEDUCTION U/S 35(2AB). THE LD. CIT (A) H AS NOT CONSIDERED THE FACTS FOR DISALLOWING THE WEIGHTED DEDUCTION U/S 35(2AB) BUT ON THE BASIS OF RECOGNITI ON FROM DSIR IS PENDING WHICH IS OUT OF CONTROL OF TH E ASSESSEE. THE ASSESSEE HAD DULY COMPLIED WITH ALL T HE FORMALITIES AS MENTIONED IN SECTION 35(2AB). HOWEVE R THE REPORT IN FORM NO. 3CL WAS RECEIVED BY THE ASSESSEEON25/09/2013(AFTER COMPLETION OF ASSESSMENT AND FILLING OF PRESENT APPEAL). A SEPARATE REQUEST LETTER TO ADMIT THE SAME AS ADDITIONAL EVIDENCE WAS ALREAD Y SUBMITTED DATED 4 TH OCTOBER 2013 VIA FAX. DSIR IN ITS FORM 3CL RECOGNIZED RS. 7 55 18 000/-AS REVENUE EXPENDITURE AND THE SAME IS ELIGIBLE FOR WEIGHTED DEDUCTION @ 150%. 5. DURING THE COURSE OF HEARING BEFORE US THE LEAR NED COUNSEL FOR THE ASSESSEE ARGUED THAT THE CIT (APPEA LS) HAD WRONGLY REJECTED ADMISSION OF ITS ADDITIONAL EVIDEN CE SINCE IT WAS EVIDENT THAT THE ASSESSEE WAS PREVENTE D BY SUFFICIENT CAUSE FOR NOT PRODUCING THE SAME BEFORE THE ASSESSING OFFICER. THE LEARNED COUNSEL FOR THE ASS ESSEE DREW OUR ATTENTION TO THE APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE FILED BEFORE THE LEARNED CIT (A PPEALS) AND REPRODUCED AT PARA 4 OF THE ORDER OF THE CIT (A PPEALS) AND POINTED OUT THAT IT WAS CATEGORICALLY SHOWN TO THE CIT (APPEALS) THAT THE APPROVAL FROM DSIR WHICH WAS TH E ADDITIONAL EVIDENCE WAS RECEIVED LATE BY THE ASSES SEE I.E. ON 25.9.2003 SIX MONTHS AFTER COMPLETION OF ASSESS MENT. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT TH AT EVEN THE LEARNED CIT (APPEALS) APPRECIATED THE SAME AT P ARA 6 4.3 OF HIS ORDER. THE LEARNED COUNSEL FOR THE ASSE SSEE STATED THAT WHEN THE APPROVAL ITSELF WAS RECEIVED L ATE THE ASSESSEE COULD NOT HAVE SUBMITTED IT DURING ASSESSM ENT PROCEEDINGS AND THERE WAS SUFFICIENT CAUSE FOR SUBM ITTING THE SAME AS ADDITIONAL EVIDENCE. THE LEARNED COUNS EL FOR THE ASSESSEE THEREAFTER PLEADED THAT SINCE THE ASSE SSEE HAD OBTAINED THE REQUISITE APPROVAL IT SHOULD NOT HAVE BE DENIED DEDUCTION UNDER SECTION 35(2AB) OF THE ACT I N THE FIRST PLACE. ALTERNATIVELY THE LEARNED COUNSEL FO R THE ASSESSEE PLEADED THAT ITS CLAIM OF CAPITAL EXPENSES SHOULD BE ALLOWED UNDER SECTION 35(1(IV) OF THE ACT SINCE THE HON BLE ITAT HAD ALLOWED THE SAME TO THE ASSESSEE I N ASSESSMENT YEAR 2006-07 VIDE ITS ORDER DATED 17-06- 2011 IN ITA NO.2111(DELHI) OF 2010. 6. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIE S BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. 7. THE FIRST ISSUE WHICH NEEDS TO BE ADDRESSED IN THE PRESENT SET OF APPEALS IS THE DENIAL OF ADMISSION O F ADDITIONAL EVIDENCE I.E FORM NO.3CL BEING APPROVAL BY THE PRESCRIBED AUTHORITY OF EXPENSES INCURRED FOR T HE PURPOSE OF CLAIMING WEIGHTED DEDUCTION OF THE SAME U/S 35(2AB) OF THE ACT. UNDISPUTEDLY THE REQUISITE A PPROVAL FOR SCIENTIFIC RESEARCH EXPENDITURE IN FORM.NO.3CL WAS RECEIVED ON 25.9.2013 I.E. SIX MONTHS AFTER COMPLE TION OF ASSESSMENT ON 31-03-2013. THIS BEING SO WE FAIL T O UNDERSTAND HOW THE ASSESSEE COULD HAVE SUBMITTED TH E 7 SAME DURING ASSESSMENT PROCEEDINGS. HAVING RECEIVE D THE APPROVAL LATE THERE WAS SUFFICIENT CAUSE FOR NOT P RODUCING THE SAME BEFORE THE ASSESSING OFFICER AND AS PER CL AUSE (B) OF SUB-RULE (1) OF RULE 46A OF THE INCOME TAX R ULES THE LEARNED CIT (APPEALS) WE HOLD SHOULD HAVE ADM ITTED THE ADDITIONAL EVIDENCE. THE DENIAL OF ADMISSION O F THE ADDITIONAL EVIDENCE BY THE LD.CIT(A) FOR THE REASON THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVE THAT THE DE LAY WAS NOT ATTRIBUTABLE TO IT IS ABSURD SINCE CLEARLY TH E RECEIPT OF THE APPROVAL WAS NOT IN THE ASSESSEES CONTROL. F URTHER THE ADDITIONAL EVIDENCE WAS RELEVANT AND GOES TO TH E ROOT OF THE MATTER. THE HON'BLE SUPREME COURT IN THE CA SE OF TEK RAM V CIT 262 CTR 118 (SC) AND THE HON'BLE HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V MU KTA METAL WORKS 336 ITR 555 (P&H) ADMITTED THE ADDITIO NAL EVIDENCE BEING RELEVANT AND REQUIRED TO BE LOOKED I NTO. WE THEREFORE HOLD THAT THE ADDITIONAL EVIDENCE AD DUCED BY THE ASSESSEE BEING APPROVAL OF EXPENDITURE INCU RRED ON SCIENTIFIC RESEARCH & DEVELOPMENT IN F.NO.3CL BE ADMITTED. 8. HAVING ADMITTED THE ADDITIONAL EVIDENCE WE RESTORE THE MATTER TO THE ASSESSING OFFICER TO D ECIDE THE ISSUE OF ALLOWABILITY OF CLAIM U/S 35(2AB) AFRESH AS PER LAW AND IN THE LIGHT OF THE APPROVAL GRANTED TO THE ASSESSEE AFTER DULY EXAMINING THE SAME AND AFTER G IVING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASS ESSEE IN TURN IS DIRECTED TO PRODUCE THE ADDITIONAL EVID ENCE 8 BEFORE THE AO AND IS ALSO FREE TO PRODUCE ANY OTHER EVIDENCE ON WHICH IT WISHES TO PLACE RELIANCE. 9. THE OTHER GROUNDS RAISED IN THE APPEAL BEING CONSEQUENTIAL TO THE EXAMINATION OF THE ADDITIONAL EVIDENCE BY THE AO THE SAME ARE ALLOWED FOR STATIS TICAL PURPOSES. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE STAN DS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 243/CHD/2015 15. THE ISSUE INVOLVED IN THE APPEAL IN ITA NO. 243/CHD/2015 IS IDENTICAL TO THAT IN ITA NO. 242/CHD/2015. IN THE IMPUGNED CASE ALSO THE ASSESSE E WAS DENIED CLAIM OF WEIGHTED DEDUCTION UNDER SECTIO N 35(2AB) OF THE ACT SINCE IT HAD NOT FILED THE STATU TORY APPROVAL IN FORM NO. 3CL TO THE AO AND WHEN THE SAM E WAS FILED AS ADDITIONAL EVIDENCE BEFORE THE LD. CIT (A) SINCE IT WAS RECEIVED LATE AFTER PASSING OF THE ASS ESSMENT ORDER LD. CIT(A) REFUSED TO ADMIT THE SAME BY STAT ING THAT THE ASSESSEE WAS NOT ABLE TO PROVE THAT THE DE LAY WAS NOT ATTRIBUTABLE TO IT. LD. CIT(A) THEREFORE DISALL OWED THE ASSESSES CLAIM OF DEDUCTION UNDER SECTION 35(2AB ) AS ALSO ITS ALTERNATIVE CLAIM OF CAPITAL EXPENDITURE U NDER SECTION 35(1)(IV) OF THE ACT WHILE ALLOWING AT THE SAME TIME ITS CLAIM OF REVENUE EXPENDITURE UNDER SECTION 37(1 ) OF THE ACT. SINCE IDENTICAL ISSUE HAS BEEN DECIDED BY US IN THE 9 APPEAL IN ITA NO. 242/CHD/2015 ABOVE THE FINDINGS GIVEN THEREIN SHALL APPLY TO THE PRESENT APPEAL WITH EQUA L FORCE. 16. IN THE RESULT THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 7 TH OCTOBER 2016 *RATI/RKK* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR ITAT CHANDIGARH