Appeal details
Counselvise Citation
[2020] 110 COUNSELVISE.COM (IT) 3976 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 year(s) 2 month(s) 20 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
02-11-2020
Appeal Filed By
Department
Order Result
Allowed
Bench Allotted
B
Next Hearing Date
28-10-2020
Assessment Year
2002-2003
Appeal Filed On
12-08-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A.K GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO. 1240 /BANG/201 3 ASSESSMENT YEAR : 20 02 - 03 THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1)(1), BENGALURU. VS. M/S AVASARLA TECHNOLOGIES LTD., NO.89B, 90A, ELECTRONIC CITY, HOSUR ROAD, BENGALURU-560 029. PAN AABCA 2381 E APPELLANT RESPONDENT APPELLANT BY : SHRI PRIYADARSHI MISHRA, JCIT (DR) RESPONDENT BY : NONE DATE OF HEARING : 28.10.2020 DATE OF PRONOUNCEMENT : 02.11.2020 O R D E R PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY REVENUE AGAINST ORDER DATED 10/06/2013 PASSED BY LD. CIT (A)-1, BANGALORE FOR A SSESSMENT YEAR 2002-03 ON FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A), IN SO FAR AS I T IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND FACTS AN D CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF T HE ASSESSEE ON THE ISSUE OF DISALLOWANCE OF R & D EXPENDITURE AMOUNTIN G TO RS. ITA NO.1240/BANG/2013 PAGE 2 OF 7 4,94.90,503/- FOR THE AY 2002-03 RESPECTIVELY BY RE LYING ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CI T V. RELIANCE PETRO PRODUCTS PVT. LTD. WITHOUT APPRECIATING THAT THE FA CTS ARE TOTALLY DIFFERENT FROM THE CASE OF THE ASSESSEE COMPANY, IN AS MUCH AS THE ADDITION IN THE RELIED UPON CASE WAS ON ACCOUNT OF DISALLOWANCE TINDER SECTION 14A AND THERE WAS NO FINDING THAT ANY IN FO RMATION FURNISHED BY THE ASSESSEE WERE FOUND TO BE INCORRECT OR ERRON EOUS OR FALSE WHILE IN THE INSTANT CASE THE ADDITION IS MADE ON ACCOUNT OF A FALSE CLAIM IN THE WRITTEN OF INCOME WHICH THE AO HAS HELD TO BE ' INACCURATE PARTICULARS OF FURNISHING OF INCOME'. 3. FOR THESE AND SUCH OILIER GROUNDS THAT MAY BE UR GED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT (A) BE REVERSED AND THAT OF THE AO BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, AME ND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARIN G OF THE APPEAL. BRIEF FACTS OF THE CASE ARE AS UNDER 2.ASSESSEE FILED ITS RETURN OF INCOME FOR YEAR UNDE R CONSIDERATION ON 30/10/2000 DECLARING LOSS OF RS.4,50,79,764/-. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT AND W AS SELECTED FOR SCRUTINY. SUBSEQUENTLY, NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED ON ASSESSEE. IN RESPONSE TO STATUTORY NO TICES, REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD.AO AN D FILED REQUISITE DETAILS AS CALLED FOR. LD.AO OBSERVED THA T ASSESSEE WAS IN THE BUSINESS OF MANUFACTURING AND TRADING OF ELECTR ON GUN FOR BLACK-AND-WHITE AND COLOUR PICTURE TUBES. 3. LD.AO NOTED THAT, ASSESSEE CLAIMED DEDUCTION OF RS.4,94,90,503/- UNDER SECTION 35 (1) (IV) OF THE A CT, ON THE GROUND THAT IT RELATED TO RESEARCH AND DEVELOPMENT CAPITAL EXPENDITURE. LD.AO REJECTED THE CLAIM OF DEDUCTION BY OBSERVING THAT ASSESSEE WAS INVOLVED IN THE MANUFACTURING AND TESTING OF AU XILIARY GROOMED ALUMINUM AMMONIA HEAT PIPES USED IN SPACECRAFTS BY USING THE TECHNOLOGY PROVIDED BY INDIAN SPACE RESEARCH ORGANI ZATION (ISRO), AND NOT OUT OF ITS OWN RESEARCH AND DEVELOPMENT. L D.AO OPINED ITA NO.1240/BANG/2013 PAGE 3 OF 7 THAT ASSESSEE DID NOT FULFILL THE CONDITIONS CONTEM PLATED UNDER SECTION 35(1)(IV) OF THE ACT. LD.AO THEREFORE INITI ATED PENALTY PROCEEDINGS. ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A) AGAINST THE DISALLOWANCE, WHICH WAS DISMISSED BY ORDER DATED 30 /05/2008. 4. BE THAT AS IT MAY, SUBSEQUENTLY, LD.AO ISSUED NO TICE CALLING UPON ASSESSEE TO FURNISH ANY WRITTEN SUBMISSION IF ASSESSEE WISHES TO REBUT THE LEVY OF PENALTY UNDER SECTION 2 71(1)( C) VIDE LETTER DATED 12/06/2008. IN THE PENALTY ORDER SO PA SSED BY LD.AO DATED 30/12/2008 IT HAS BEEN RECORDED THAT THERE WA S NO RESPONSE TO THE INTIMATIONS ISSUED TO ASSESSEE AND LD.AO LEV IED PENALTY FOR FURNISHING INACCURATE PARTICULARS OF INCOME UNDER S ECTION 271(1)(C) OF THE ACT. 5. AGGRIEVED BY THE PENALTY ORDER PASSED BY LD.AO, ASSESSEE FILED APPEAL BEFORE LD.CIT(A) WITH A DELAY OF 2 YEA RS AND 5 MONTHS WHICH WAS NOT CONDONED. ASSESSEE THEREAFTER PREFERR ED APPEAL BEFORE THIS TRIBUNAL . THIS TRIBUNAL CONDONED THE DELAY ON THE PART OF ASSESSEE IN FILING THE APPEAL AND REMANDED THE I SSUE TO LD.CIT(A) FOR DECIDING IT ON MERITS. 6. LD.CIT(A) THEREAFTER CONSIDERED THE ISSUES ON ME RITS. IN THE IMPUGNED ORDER BEFORE US, IT IS NOTED THAT LD.CIT(A ) CONSIDERED LETTER DATED 12/04/2013, FILED BY ASSESSEE BEING FR ESH STATEMENT OF FACTS AND GROUNDS OF APPEAL. BEFORE LD.CIT(A) ASSES SEE FILED RECOGNITION RECEIVED FROM R&D UNIT, MINISTRY OF DE PARTMENT OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA IN JANU ARY 2012. ITA NO.1240/BANG/2013 PAGE 4 OF 7 7. LD. CIT (A) WHILE DECIDING THE ISSUE, NOTED THA T LD. AO SHOULD HAVE REFERRED THE MATTER TO THE BOARD THROUG H PROPER CHANNEL, AS TO WHETHER ASSESSEES ACTIVITY INVOLVE SCIENTIFIC RESEARCH AND DEVELOPMENT. HE DELETED THE PENALTY L EVIED ON THIS BASIS. 8. AGGRIEVED BY THE ORDER OF LD. CIT (A), REVENUE I S IN APPEAL BEFORE US NOW. 9. LD. SENIOR DR SUBMITTED THAT, ON ONE HAND LD.CIT (A) RECORDS THAT LD.AO SHOULD HAVE REFERRED TO THE BOARD THROUG H PROPER CHANNEL AS TO WHETHER ASSESSEES ACTIVITY INVOLVE S CIENTIFIC RESEARCH AND DEVELOPMENT OR NOT, WHEREAS ON THE OTHER HAND H E HIMSELF DOES NOT TAKE SUCH NECESSARY ACTIONS AND DECIDES TH E ISSUE HIMSELF. HE SUBMITTED THAT LD.CIT(A) IN THE IMPUGNE D ORDER DELETED THE PENALTY ON THE BASIS THAT MERELY A DISALLOWANCE OF CLAIM TOWARDS RESEARCH CANNOT LEAD TO FURNISHING OF INACC URATE PARTICULARS OR CONCEALMENT BY ASSESSEE WHICH IS WIT HOUT ANY BASIS. HE THUS SUBMITTED THAT THE ISSUE MAY BE REMANDED TO LD.CIT(A), AS NECESSARY ACTIONS IN RESPECT OF VERIFICATION WIT H THE BOARD REGARDING ACTIVITY BY ASSESSEE CONSTITUTING SCIENT IFIC RESEARCH AND DEVELOPMENT DURING THE RELEVANT PERIOD WAS NOT TAKE N. 10. NONE APPEARED ON BEHALF OF ASSESSEE TODAY THOUG H THE DATE OF HEARING HAS BEEN INFORMED TO ASSESSEE BY THE REV ENUE WHICH IS SUBSTANTIATED BY LETTER DATED 21/10/2020 INTIMATING SERVICE OF NOTICE. THE ACKNOWLEDGMENT OF SERVICE PROVES THAT ASSESSEE WAS INTIMATED REGARDING DATE OF HEARING ON 21/10/2020. ITA NO.1240/BANG/2013 PAGE 5 OF 7 11. WE ARE THEREFORE INCLINED TO DECIDE THE ISSUE B ASED ON THE DETAILS AVAILABLE ON RECORD AND THE SUBMISSIONS ADV ANCED BY LD.SR DR. 12. WE NOTE THAT LD.AO PASSED PENALTY ORDER WITHOUT CONSIDERING THE SUBMISSIONS OF ASSESSEE. IT IS NOTE D THAT NONE APPEARED BEFORE LD.AO DURING PENALTY RECEDING. 13. BEFORE LD.CIT(A) ASSESSEE FILED RECOGNITION RE CEIVED BY ASSESSEE FROM MINISTRY OF DEPARTMENT OF SCIENCE AND TECHNOLOGY, GOVERNMENT OF INDIA IN THE YEAR JANUARY 2012. IT IS SUBMITTED BY ASSESSEE IN WRITTEN SUBMISSION FILED BEFORE LD.CIT( A) DATED 12/04/2013 (REPRODUCED BY LD.CIT(A) IN PART PARA 3. 4) THAT, THOUGH SAID INTIMATION MAY NOT BE RELEVANT FOR THE YEAR UNDER CONSIDERATION, HOWEVER THE FACT THAT THIS RECOGNITI ON HAS COME AFTER CONTINUED AND SUSTAINED ACTIVITIES CARRIED ON IN TH E FIELD OF RESEARCH OVER SEVERAL YEARS AS OBSERVED BY GOVERNME NT OF INDIA CANNOT BE IGNORED. 14. WE NOTE THAT UNDER SUCH CIRCUMSTANCES IT IS REL EVANT THAT NECESSARY STEPS MAY BE TAKEN TO ASCERTAIN IF ASSESS EE COULD BE CONSIDERED TO BE CARRYING OUT RESEARCH AND DEVELOPM ENT ACTIVITIES DURING THE RELEVANT PERIOD. LD.CIT(A) HAVING OBSERV ED THE SAME HAS NOT TAKEN NECESSARY STEPS. THE ISSUE CONSIDERED BY LD.CIT(A) NEEDS TO BE ASCERTAINED BASED UPON THE FACTS IN PRESENT C ASE. WE THEREFORE FIND IT PROPER TO REMAND THE ISSUE BACK T O LD.CIT(A) TO TAKE NECESSARY ACTIONS/STEPS TO ASCERTAIN, WHETHER ASSESSEE COULD BE CONSIDERED TO BE CARRYING OUT WITH RESEARCH AND DEVELOPMENT ACTIVITY DURING THE RELEVANT PERIOD UNDER CONSIDERA TION, BASED ON ITA NO.1240/BANG/2013 PAGE 6 OF 7 THE RECOGNITION ISSUED BY MINISTRY OF DEPARTMENT OF SCIENCE AND TECHNOLOGY GOVERNMENT OF INDIA IN JANUARY 2012. 15. IN THE LIGHT OF ABOVE DISCUSSION WE REMAND THE ISSUE LD.CIT(A) FOR NECESSARY STEPS. ACCORDINGLY, ISSUES RAISED BY REVENUE STANDS ALLOWE D FOR STATISTICAL PURPOSES. IN THE RESULT APPEAL FILED BY REVENUE STANDS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND NOV, 2020. SD/- SD/- (A.K GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 2 ND NOV, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE ITA NO.1240/BANG/2013 PAGE 7 OF 7 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -11-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -11-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -11-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -11-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -11-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -11-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -11-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS
