Ita/435/2014 Of The Commissioner Of Income-Tax v. M/S Biocon Ltd

- 1 - IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 1 DAY OF JUNE, 2015) PRESENT THE HON'BLE MR.JUSTICE MOHAN M. SHANTANAGOUDAR| AND THE HON'BLE MR.JUSTICE ARAVIND KUMAR LTA. NO .435/2014 BETWEEN 1.Tne Commissioner of Income-TlaxLTU.JSS TowersBSK III Stage.Bangalore 2.Tne Deputy Commissioner of Income-TaxLTU.JSS TowerBSK III Stage.Bangalore-560085 ..Appellants| (By Sri K.V. Aravind, Adv.,) AND :. M/s. Biocon Ltd.,!([tn]KM, Hosur Road.Electronic City, Hebbagodi Bangalore-560100 ..Respondent - 2 - This Income Tax Appeal is filed under Section 260-A of Income Tax Act 1961, arising out of order dated 30.04.2014|passed in ITA No.248/Bang/2010, for the assessment year|2004-2005 praying to formulate the substantial questions of law stated and allow the appeal and set aside the orders|passed by the Income Tax Appellate Tribunal. This ITA coming on for admission, this day, MOHAN M. SHANTANAGOUDAR, J.,delivered the following:- JUDGMENT Tne assessee is engaged in the business ofmanufacture of enzymes and pharmaceutical ingredients.Tne matter pertains to return of income for the|assessment year 2003-04. The records reveal tnat|during the relevant assessment year, the assessee has|incurred certain expenditure on capital towards cost ofmacninery for a sum of Rs.7,82,25,431/-. The assessingOfficer noticed thnat the said amount included a sum of - 3 - Rs.2,/72,59,589/-incurred.towardsthree itemsofmachinery. The assessing Officer also noticed that thesaid three items of machinery have not been installed|and commissioned and therefore the assessee is notentitled for weighted deduction under Section 35(2AB) of|the Income Tax Act (Act’ for short) and hence held that|such expenditure does not amount to expenditureincurred during that period. The Commissioner ofIncome Tax (Appeals), Bangalore as well as the Income|Tax Appellate Tribunal disagreed with the said conclusion|reached by the assessing Officer and nave held that theassessing Officer is not justified in not allowing weighted|deduction under Section 35(2AB) of the Act, inasmuch as)the words which are not provided in the statute aresought to be read into, by the assessing Officer. 2. We do not find any ground to disagree with theconclusion reached by the Commissioner of Income Tax)(Appeals) and the appellate Tribunal. What Section - 4 - 35(2AB) of the Act speaks of is (a) development offacilities: (b) incurring of expenditure by the assessee for|development of such facilities: (c) approval of facility by|the prescribed authority, which is “DSIR’; and (qd)allowance of weighted deduction on the expenditure so)incurred by the assessee. 3. On plain reading of the said provision makes itamply clear that the assessee nas to develop facility by|incurring expenditure for scientific research and he will|nave to file application before the prescribed authority,who after following the proper procedure, will allow the)application or otherwise and the assessee would beentitled for weighted deduction in respect of allexpenditureSOincurred.The|provisionnowhereSuggests or implies that machinery is required to be |installed and commissioned before the expiry of therelevant previous’ year. The’ provision postulatesapproval of ‘R & D’ facility, which implies that a - 5 - development facility shall be in existence, which in turn,|presupposes that the assessee must Nave’ incurredexpenditure in this behalf. The appellate Tribunal has|rightly concluded that in case if the interpretation of theassessing Officer is accepted, it creates absurdity in the)provision, inasmucn as the words wnich are not providedin the statute are to be read into, wnicn is against thesettied proposition of law with regard to plain and simple|meaning of the provision. Tne plain and nhomogenousreading of the provisions would suggest that the entireexpenditure incurred in respect of ‘R & D’ has to be)allowed for weighted deduction under Section 35(2AB) of|the Act. - 5 - development facility shall be in existence, which in turn,|presupposes that the assessee must Nave’ incurredexpenditure in this behalf. The appellate Tribunal has|rightly concluded that in case if the interpretation of theassessing Officer is accepted, it creates absurdity in the)provision, inasmucn as the words wnich are not providedin the statute are to be read into, wnicn is against thesettied proposition of law with regard to plain and simple|meaning of the provision. Tne plain and nhomogenousreading of the provisions would suggest that the entireexpenditure incurred in respect of ‘R & D’ has to be)allowed for weighted deduction under Section 35(2AB) of|the Act. Even on facts, it has been found by the assessing|Officer that an installation certificate nad been issued on.31.33.2004 by one Mr.Virupaksha (concerned officer)evidencing that three scientific machines were installed. |Hence, we do not find any ground to interfere with the - 6 - orders passed by the Income Tax Appellate Tribunal and no substantial question of law is involved in this appeal. Accordingly,appealfalls|and.Samestands dismissed *ck/-| Sd/-| JUDGE Sd/-| JUDGE.