IN INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No.227, 228, 229 & 230/Chd/2015 (Assessment Year :2006-07, 2009-10, 2010-11 & 2011-12) D.C.I.T., Vs. M/s Parabolic Drugs Ltd., Central Circle-1, SCO 99-100, Sector 17B, Chandigarh. Chandigarh. PAN: AACCP1419K (Appellant) (Respondent) Appellant by : Shri Sushil Kumar, CIT DR Respondent by : Shri Sudhir Sehgal Date of hearing : 27.09.2016 Date of Pronouncement : 06.10.2016 O R D E R PER ANNAPURNA GUPTA, A.M. : above four appeals have been filed by Revenue against separate orders of learned Commissioner of Income Tax (Appeals)-3, Gurgaon dated 16.12.2014 relating to assessment year 2006-07, 2009-10, 2010-11 & A.Y 2011-12. Since issue involved in all appeals is identical ,they were heard together and are being disposed off by this common order. For sake of convenience we shall be dealing with facts in ITA No.227/Chd/2015. 2 2. Revenue has raised following grounds : 1. Whether on facts and circumstances of case and as per provisions of law, Ld. CIT(A) is correct in deleting protective addition made by Assessing Officer on ground that issue involved has attained finality whereas revenue has filed appeal vide diary no. 154880/2014 & which is pending for adjudication before Delhi High Court? 3. Brief facts relating to issue are that assessee is company engaged in business of manufacturing of bulk drugs and fine chemicals, etc. having manufacturing facilities at Derabassi, Punjab and Panchkula, Haryana and R&D facilities at Derabassi, Punjab and Barwala, Haryana. assessee had obtained approval from prescribed authority for claiming weighted deduction @ 150% of expenditure incurred on scientific research and development u/s 35(2AB) of Act. During impugned year assessee incurred following expenses on scientific research and development: Capital Expenditure Rs.44,41,522/- Revenue Expenditure Rs.7,38,11,965/- Total Rs.7,82,53,487/- In return of income filed u/s 139(1) of Act,the assessee claimed weighted deduction u/s 35(2AB) of Act on same amounting to Rs.11,73,80,230/-. Later it was granted approval from prescribed authority in Form No.3CL, for claiming deduction to extent of following 3 Capital Expenditure Rs. 41.70 Lacs Revenue Expenditure Rs. 26.17 Lacs Total Rs.67.87 Lacs assessee revised its return on 07/11/2007 and claimed weighted deduction on same amounting to Rs.1,03,28,830/-.The balance revenue expenses amounting to Rs 7,10,95,947/-,on which approval was not granted, was claimed u/s 37(1) of Act. In assessment framed u/s 143(3) of Act, assessee was denied claim made u/s 37(1) of Act. Before first appellate authority assessee, alongwith claim made u/s 37(1)also alternately claimed deduction u/s 35(1)(i) of Act, which was denied by CIT(A).In appeal filed before ITAT claim of assessee was upheld vide order dated 17-06-2011 in IT Appeal No.2111(Delhi) of 2010 .In meanwhile search u/s 132 was conducted on assessee on 17/09/2010 and in response to notice u/s 153A assessee filed return claiming deduction u/s 35(2AB) of Rs.8,10,14,225/-.The AO in order passed u/s 153A(1)(b) r.w.s 143(3) of Act, dt.31-03-2013,allowed assesses claim of weighted deduction u/s 35(2AB) to extent approved amounting to Rs.1.03 crores, while balance amounting to Rs.7,08,33725/- was denied and added back to income of assessee on protective basis, since AO held that while Hon ble ITAT had granted relief to assessee of same in separate proceedings against order passed 4 u/s 143(3) of Act, but Revenue had filed appeal against order of ITAT and substantive addition would be made if Revenue succeeded in its appeal before High Court. assessee successfully contested disallowance before Ld.CIT(A) who allowed assesses claim following order of ITAT in this respect in proceedings against order passed u/s 143(3) of Act for same year in case of assessee. 4. Aggrieved by same, Revenue filed present appeal before us. 5. During course of hearing before us, learned D.R. filed written submissions stating that learned CIT (Appeals) had erred in relying on decision of Hon'ble I.T.A.T., Chandigarh in case of assessee since facts in both cases were different. learned D.R. pointed out that in original proceedings, assessee had revised its return of income restricting its claim made under section 35(2AB) of Act, while claiming balance deduction under section 37(1) of Act. While in impugned case, assessee had not revised its return and claimed entire deduction only under section 35(2AB) of Act. In absence of any claim made by assessee, learned D.R. pleaded that same should not be allowed at this stage and should not have been admitted by learned CIT (Appeals) and, therefore, relief granted to assessee was wrong. 5 6. learned counsel for assessee, on other hand, relied upon order of learned CIT (Appeals) and stated that this issue of alternative claim of assessee for impugned year had already been decided by I.T.A.T. in appeal filed against assessment proceedings under section 143(3) of Act and, therefore, there was no reason to differ from same. As far as argument of learned D.R. that assessee had not claimed deduction under section 37(1) or under section 35(1)(i) of Act in first place, learned counsel for assessee pointed out that claim of assessee made in return filed under section 153A amounting to Rs.8,10,14,225/- under section 35(2AB) of Act was in fact inadvertent error. learned Counsel pointed out that in fact, assessee had claimed deduction under section 35(2AB) of Rs.1,03,28,830/- and under section 37(1)) of Rs.7,10,95,947/-, as claimed in revised return filed on 7.10.2007 and sum total of which came to Rs.8,10,14,225/-. By mentioning only section 35(2AB) of Act in return of income, assessee had made inadvertent mistake while fact was that it had claimed deduction under two separate sections of Act and thus, argument of learned D.R. was in fact factually incorrect and hence did not merit any consideration at all. 6 7. We have heard rival contentions, perused orders of authorities below as also documents placed before us. 8. only grievance of Revenue in present appeal is against action of CIT (Appeals) in allowing claim of assessee of revenue expenses incurred on Scientific Research and Development under section 37(1)/35(1)(i) of Income Tax Act, 1961 (in short Act ). 9. We find no infirmity in order of CIT(A) granting deduction of revenue expenses u/s 37(1)/35(1)(i) of Act, following decision of ITAT in assesses own case for same year in separate proceedings. Admittedly ITAT had in earlier order on identical issue for same year allowed alternative claim of assessee of impugned expenses u/s 37(1)/35(1)(i) of Act.Further neither Revenue nor assessee could enlighten Bench on status of appeal filed by Revenue against order of ITAT, despite specific query raised by Bench in this regard.It therefore follows that in absence of any decision of High Court , order passed by ITAT stands, as rightly held by Ld.CIT(A) and since issue stands decided by ITAT in favour of assessee, we find no reason to take any other view in matter at all. 7 Further we find no merit in argument of Ld DR that facts of present case are different from that decided by ITAT in that in present case assessee had made no claim of deduction u/s 37(1) while it had done so in case before ITAT. AO, we find ,has disallowed claim merely by not following order of ITAT ,which obliquely means that claim was made before her .Even otherwise we find that asseessee had inadvertently mentioned section 35(2AB) only in return of income while actually intending to claim deduction both under section 35(2AB) and 37 of Act. This becomes evident from fact that in revised return filed on 07-11-2007 assessee had claimed total deduction of Rs.8.14 crores as follows: u/s 35(2AB) Rs. 1.03 crores u/s 37(1) Rs.7.11 crores Total Rs.8.14 crores This was allowed in entirety by ITAT also. In return filed u/s 153A assessee claimed entire amount of Rs.8.10 crores, u/s 35(2AB) only without bifurcating same between u/s 35(2AB) and u/s 37(1) of Act.In present set of facts ,that expenditure approved for purposes of section 35(2AB) remaining same as also total quantum of expenses incurred on research and development, there was no occasion for assessee to claim weighted deduction u/s 35(2AB) amounting to Rs.8.10 crores and obviously it was only 8 inadvertent error on part of assessee.We find that assessee had clarified this to Ld CIT(A) also in its written submissions filed and reproduced at para 5 of order. Clearly assessee had claimed deduction of impugned sum u/s 37(1)/35(1)(i) of Act and argument of Ld. DR on this account is therefore rejected. In view of above, we uphold order of learned CIT (Appeals) allowing assessee s claim of deduction amounting to Rs.7,08,33,725/- under sections 37(1) and 35(1)(i) of Act. 10. In result, appeal of Revenue is dismissed. ITA Nos. 228, 229 & 230/Chd/2015 11. issue in above three appeals is identical to that in ITA No. 227/Chd/2015 relating to allowance by Ld. CIT(A), of assessees claim of expenditure incurred on scientific research and development under section 37(1) / 35(1)(i) of Act, following decision of ITAT in assessees own case in AY 2006-07, as against protective addition made of same by AO. Since we have decided this issue in ITA No. 227/Chd/2015 decision rendered therein squarely applies to present appeals also, following which we uphold order of Ld. CIT(A) allowing claim of assessee under section 37(1) / 35(1)(i) of Act. 9 12. appeals of revenue are therefore dismissed. Sd/- Sd/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated : 06 t h October, 2016 *Rati/rkk* Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT 5. DR Assistant Registrar, ITAT, Chandigarh D.C.I.T, Central Circle-1, Chandigarh v. M/s Parabolic Drugs Ltd