ITAT allows Deduction u/s 35(2)(AB) which was disallowed by CIT on the Ground of Non-Application of Mind [Read Order]

Deduction - ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal in the case of ACIT v M/s Crompton Greaves Ltd. held that deduction of Scientific Research Expenditure disallowed without application of mind was allowed.

With respect to the first issue, the assessee had incurred in-house Scientific Research expenditure (capital and revenue) wherein it had claimed weighted deduction u/s 35(2)(AB) of the Income Tax Act in computing the total income @ 150% of the actual expenditure on another unit then the unit approved by DSIR.

The Bench constituting of members Rajesh Khanna and A.D. Jain held the following:

1) The ground for the disallowance was the non-approval of the expenditure claimed by the DSIR i.e. AO disallowed the claim without due application of mind. The Bench hence accepting the reversing order passed by the CIT disallowed the addition made by the same.

With respect to the second issue, the assessee claimed depreciation on a part of building i.e. 84% which become disallowable for the relevant period, due to the reason it was disallowed by the ITAT. The AO did not allow the depreciation to the assessee on higher revised opening WDV of the building, which as per the assessee was required to be increased, by revising it on account of disallowance of depreciation in the past. While CIT ruled in favour of the assessee, the AO disputed the direction of the CIT(A).

2) The AO ought to have allowed the higher depreciation on the direction issued by the ld. CIT (A) which the AO did not and hence is directed to revise the figure. It is for the reason that the assessee was not in a position to claim a higher depreciation in return of income by adjusting the opening WDV.

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