Ita/158/2021 Of Principal Commissioner Of Income Tax - 4 v. M/S Kumar Organics Products Ltd

Digitally signedbyMARIGANGAIAHPREMAKUMARILocation: HIGHCOURT OFKARNATAKA IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24 DAY OF SEPTEMBER, 2024 PRESENT THE HON'BLE MR JUSTICE S.G.PANDIT AND THE HON'BLE MR JUSTICE C.M. POONACHA INCOME TAX APPEAL NO. 158 OF 2021 BETWEEN: 1. PRINCIPAL COMMISSIONER OF INCOME TAX – 4, BMTC COMPLEX, KORMANAGALA, BENGALURU. BMTC COMPLEX, KORMANAGALA, BENGALURU. 2. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), BMTC COMPLEX, KORMANAGALA, BENGALURU. CIRCLE-4(1)(1), BMTC COMPLEX, KORMANAGALA, BENGALURU. …APPELLANTS (BY SRI SANMATHI E I, ADVOCATE) AND: 1. M/S KUMAR ORGANICS PRODUCTS LTD., 819/C, USHA KRISHAN CENTRE, 13 CROSS, 819/C, USHA KRISHAN CENTRE, 13 CROSS, 7 BLOCK, (WEST) JSS COLLEGE CIRCLE, JAYANAGAR BENGALURU-560082, PAN AAACK 6745P. …RESPONDENT (BY SRI S ANNAMALAI, ADVOCATE) THIS APPEAL IS FILED UNDER SEC.260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 19/07/2019 PASSED IN ITA NO.1060/BANG/2019, FOR THE ASSESSMENT YEAR 2013-2014, PRAYING THIS HON’BLE COURT TO: (A) DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND ETC. THIS APPEAL, COMING ON FOR HEARING, THIS DAY, JUDGMENT WAS DELIVERED THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S.G.PANDIT and HON'BLE MR JUSTICE C.M. POONACHA ORAL JUDGMENT (PER: HON'BLE MR JUSTICE S.G.PANDIT) Heard the learned counsel Sri.Sanmathi.E.I., for appellants/Revenue and learned counsel Sri.S.Annamalai for respondent/assessee. 2. The Revenue is in appeal under Section 260-A of the Income Tax Act, 1961 (for short, ‘the Act’) questioning the correctness and legality of order dated 19.07.2019 passed by the Income Tax Appellate Tribunal, ‘B’ Bench, Bengaluru (for short, ‘Appellate Authority’) in ITA.No.1060/Bang/2019 for the assessment year 2013-14. 3. This Court, admitted the appeal on 06.12.2021 to consider the following substantial question of law: “1. Whether on the facts and circumstances of the case, the Tribunal is right in allowing deduction under section 35(2AB) of the Act when the assessee has failed to submit Form 3CL, which qualifies the quantum of expenditure incurred on scientific research by Department of Scientific and Industrial Research (DSIR) and even when the DSIR has not issued Form 3CL due to the failure of the assessee to submit the required documents and relevant details by way of audited accounts? 2. Whether on the facts and circumstances of the case, the Tribunal is right in holding that once the Research and Development facility has been approved by the DSIR, the deduction under section 35(2AB) of the Act has to be allowed without satisfying the other conditions laid down in section 35(2AB) of the Act and when the mandatory conditions set out in section 35(2AB) of the Act are not fulfilled by the assessee? 3. Whether on the facts and circumstances of the case, the Tribunal is right in not appreciating that the DSIR is only appropriate Authority which certifies the expenditure incurred on scientific research and quantum of amount in Form 3CL for allowing deduction under section 35(2AB) of the Act and in the absence of such Form 3CL the weighted deduction under section 35(2AB) of the Act cannot be allowed?” 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 5. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 6. In view of the aforesaid submissions, the appeal 4. Learned counsel for the assessee submits that the tax effect in this appeal is less than Rs.2 Crores and therefore, the appeal should not be entertained at the instance of the revenue in view of the Circular No.09/2024 dated 17.09.2024 issued by the Central Board of Direct Taxes. It is also submitted that the aforesaid Circular binds the revenue. 5. On the other hand, learned counsel for the revenue submits that he be granted liberty to revive the appeal in case the matter falls within the exceptions under the aforesaid Circular dated 17.09.2024 and Circular No.5/2024 dated 15.03.2024. 6. In view of the aforesaid submissions, the appeal is disposed of with liberty as prayed for by the learned counsel for the revenue. However, the question of law is kept open to be adjudicated in an appropriate proceeding. Sd/- (S.G.PANDIT) JUDGE Sd/- (C.M. POONACHA) JUDGE MPK CT:VN List No.: 2 Sl No.: 20