No Examination of Weighted Deduction claim u/s 35(2AB): ITAT confirms Revision Order [Read Order]

The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ), confirmed the Revision Order as there was no examination of weighted deduction claim under Section 35(2AB) of the Income Tax Act, 1961.

The assessee, Maharashtra Hybrid Seeds Company Private Limited has filed the appeal challenging the revision order passed by the Principal Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961 and it relates to the assessment year 2017-18.

The Counsel for the assessee, submitted that the AO, has reopened the assessment u/s 147 of the Act for the very same purpose of verifying the weighted deduction claimed u/s 35(2AB) of the income tax Act. The AO completed the reassessment wherein he examined Form 3CL furnished by the assessee before him. After verification of Form 3CL, the AO accepted the weighted deduction claimed over the capital expenditure incurred on scientific research.

Accordingly, the Counsel submitted that the AO himself has verified the Form 3CL in the reassessment proceedings and hence the object of impugned revision order has already been fulfilled by the AO in the reassessment proceedings. Accordingly, prayed for quashing of the revision order.

The Departmental Representative, submitted that the assessee has claimed weighted deduction u/s 35(2AB) both in respect of capital and revenue expenditure on account of non-furnishing of Form 3CL. However, the AO has examined the capital expenditure only in the reassessment proceedings and further submitted that the revision order has been passed against the original assessment order and hence, non-examination of the claim under section 35(2AB) of the income tax act properly has rendered the original assessment order erroneous and prejudicial to the interests of revenue.

A Bench consisting of B.R. Baskaran, Accountant Member and Pavan Kumar Gadale, Judicial Member observed that “The Principal Commissioner of Income Tax has passed the revision order for the reason that the AO has not properly examined the weighted deduction claimed u/s 35(2AB) of the income tax Act by virtue of Form 3CL. However, the AO has reopened the assessment and has examined the above said Form 3CL, but he has restricted the examination with respect to Capital Expenditure. Thus, the claim of the assessee towards revenue expenditure remained unverified.”

“However, since the claim of the assessee towards revenue expenditure remained unverified at the end of the AO and since the assessee itself has filed rectification petition u/s 154 of the Act before the AO on the very same issue, we are of the view that the revision order passed by the Principal Commissioner of Income Tax may be confirmed partly with regard to revenue expenditure.”

Rajeev Waglay appeared for the assessee and the Department was represented at by Shailja Rai.

To Read the full text of the Order CLICK HERE

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