In the case of Britannia Industries Ltd, the Income Tax Appellate Tribunal (ITAT), Kolkata bench has quashed the revision order passed under section 263 since the revision was conducted without proper inquiry.
The appellant, Britannia Industries Ltd.is engaged in the business of manufacturing and trading bakery and dairy products. The Pr. CIT while checking the assessment records noted that the appellant had claimed a double deduction of capital expenditure under section 35(1) and section 35(2AB) of the Act which ought to have been disallowed by the AO.
ThePr. CIT further observed that the AO had disallowed the excess claim of capital and revenue expenditure for an amount of Rs.1,62,11,632/- u/s. 35(2AB) of the Act which ought to have been disallowed u/s. 35(1) also, thus formed an opinion about the under-assessment of income by Rs.1,00,95,123/- having a tax effect of Rs.34,93,720/-. Thus the Pr. CIT concluded the revisionary proceeding by setting aside the assessment.
Before the ITAT the counsel for the appellant submitted that under the provisions of section 35(1), the deduction is available to the assessee irrespective of the approval granted by DSIR in respect of the claim made u/s 35(2AB) of the Act. Clause (i) of section 35(1) provides for deduction of revenue expenditure and clause (iv) of the same sub-section provides for deduction of capital expenditure in respect of scientific research related to the business of the assessee. It is further noted that the sub-section provides for additional weighted deduction in respect of any expenditure on scientific research except for the cost of any land or building, on in-house research and development facility which is subject to theapproval granted by the prescribed authority which is DSIR in the present case.
The Tribunal observed that the PCIT did not delve into the submissions made by the assessee to point out how and what was erroneous in respect of the claim made by the assessee towards scientific research expenses u/s 35 of the Act except for noting of a mere arithmetic difference of amounts claimed by the assessee and as approved by DSIR including recording certain grossly incorrect fact relating to capital expenditure.
The Coram of Mr. Rajpal Yadav, Vice President,and Mr. Girish Agrawal, Accountant Member has held that “the issues raised by the PCIT in the revisionary proceedings, no action u/s 263 of the Act is justifiable which cannot be sustained under the facts and circumstances of the present case and judicial precedents dealt herein above. We, therefore, quash the impugned order u/s 263 of the Act and allow the grounds raised by the assessee”.
Mr. Akkal Dudhwewala and Mr. Sudipta Guha appeared on behalf of the appellant and respondent respectively.
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