Prl. Commissioner of Income-tax (Central), Bangalore / Assistant Commissioner of Income-tax, LTU, Bangalore v. Micro Labs Ltd
[Citation -2020-LL-1113-30]

Citation 2020-LL-1113-30
Appellant Name Prl. Commissioner of Income-tax (Central), Bangalore / Assistant Commissioner of Income-tax, LTU, Bangalore
Respondent Name Micro Labs Ltd.
Relevant Act Income-tax
Date of Order 13/11/2020
Assessment Year 2010-11
Judgment View Judgment
Keyword Tags disallowance of expenditure • scientific research • claim of deduction • weighted deduction • expenses incurred • book profits

1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 13TH DAY OF NOVEMBER 2020 PRESENT HON BLE MR. JUSTICE ALOK ARADHE AND HON BLE MR. JUSTICE H.T.NARENDRA PRASAD I.T.A. NO.104 OF 2017 BETWEEN: 1. PRL. COMMISSIONER OF INCOME TAX (CENTRAL), C.R. BUILDINGS QUEENS ROAD, BANGALORE-560001. 2. ASSISTANT COMMISSIONER OF INCOME-TAX LTU, BANGALORE. ... APPELLANTS (BY SRI. E.I. SANMATHI, ADV.) AND: M/S. MICRO LABS LTD., 27, KCN TOWERS RACE COURSE ROAD BANGALORE PAN AABCM 2131N. ... RESPONDENT (BY SRI. S. PARTHASARATHI, ADV.) --- THIS I.T.A. IS FILED UNDER SECTION 260-A OF I.T.ACT, 1961, ARISING OUT OF ORDER DATED 16-09-2016 PASSED IN ITA NO.4/BANG/2014, FOR ASSESSMENT YEAR 2010-11, PRAYING TO DECIDE FOREGOING 2 QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY HON'BLE COURT AS DEEMED FIT AND SET ASIDE APPELLATE ORDER DATED 16-09-2016 PASSED BY ITAT, 'A' BENCH, BENGALURU, IN APPEAL PROCEEDINGS IN ITA NO.4/BANG/2014 FOR ASSESSMENT YEAR 2010-11, AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN INTEREST OF JUSTICE. THIS I.T.A. COMING ON FOR HEARING, THIS DAY, ALOK ARADHE J., DELIVERED FOLLOWING: JUDGMENT This appeal under Section 260-A of Income Tax Act, 1961 (hereinafter referred to as Act , for short) has been preferred by revenue. subject matter of appeal pertains to Assessment Year 2010-11. appeal was admitted by Bench of this Court vide order dated 28.11.2017 to consider following substantial question of law: "Whether, on facts and in circumstances of case, Tribunal was right in setting aside disallowance of expenditure of Rs.8,91,76,870/- claimed as deduction under section 35(2)(AB) of Act which were conducted outside in-house R & D facility even when AO has rightly held that clinical 3 trial expenditure is not eligible for weighted R & D deduction under section 35(2)(AB) and it will be eligible for weighted deduction only if expenditure is incurred on in-house R & D facility, further decision relied upon by Tribunal in case of Cadila Healthcare Limited has not reached finality." 3. Facts giving rise to filing of this appeal briefly stated are that assessee is company engaged in business of manufacture of pharmaceuticals. assessee filed return of income for Assessment Year 2010-11 on 18.09.2010 declaring total income of Rs.66,76,95,460/-. Assessing Officer, vide order dated 18.05.2012 completed assessment on book profits chargeable under Section 115-JB of Act at Rs.2,55,75,40,181/- while income under normal provision was assessed at Rs.65,56,91,920/-. Being aggrieved, assessee filed appeal before Commissioner of Income Tax (Appeals), who by order dated 18.09.2013, partly 4 allowed appeal. assessee thereupon filed appeal before Tribunal. Tribunal, vide order dated 16.09.2016, set aside disallowance of expenditure of Rs.8,91,76,870/- claimed as deduction under Section 35(2)(AB) of Act which was conducted outside inhouse research and development facility. In aforesaid factual background, revenue has filed this appeal. 4. Learned counsel for revenue, while inviting attention of this Court to order passed by Tribunal, submitted that Tribunal, while allowing deduction in respect of expenses incurred on scientific research, has placed reliance on decision of Gujarat High Court in 'CIT Vs. CADILA HEALTHCARE LTD.' 2014 TAXMANN 672 and has answered issue in favour of assessee. It is further submitted that no independent finding has been recorded by Tribunal 5 on aforesaid issue. aforesaid fact could not be disputed by learned counsel for assessee. 5. We have considered submissions made on both sides and have perused record. From perusal of paragraph 9 of order passed by Tribunal, it is evident that Tribunal has allowed deduction in respect of expenses incurred by assessee on scientific research on inhouse research and development facility by placing reliance on decision of Gujarat High Court. It is pertinent to mention here that against aforesaid decision, revenue preferred special leave petition and Supreme Court, by order dated 13.10.2015 in SLP No.770/2015 has remitted matter to High Court for consideration afresh along with other issues. Since Tribunal has neither recorded any reasons nor has recorded any findings on claim of assessee, we are left with no option but to quash order of Tribunal dated 16.02.2016 insofar as it 6 pertains to claim of deduction of assessee under Section 35(2)(AB) of Act and remit matter to Tribunal for decision afresh in accordance with law after affording opportunity of hearing to parties. Therefore, it is not necessary for us to answer substantial question of law. In result, appeal is disposed of. Sd/- JUDGE Sd/- JUDGE RV Prl. Commissioner of Income-tax (Central), Bangalore / Assistant Commissioner of Income-tax, LTU, Bangalore v. Micro Labs Ltd
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