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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 28.08.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”) by Ld. CIT(A)-NFAC, Delhi. In this case, the appellant had claimed weighted deduction u/s 35(2AB) of the Act on account of specified scientific expenditure. The AO has recorded a finding that the necessary Form 3CM issued by the Department of Scientific & Industrial Research (DSIR) was not filed. As per the Ld. AO the assessee was eligible for deduction u/s 35(2AB) of the Act only from 01.04.2018 to 31.03.2018. After this finding the deduction claimed at Rs.1,91,97,051/- was disallowed and added back to the income.
Aggrieved with this action, the assessee approached the CIT(A) where he could succeed on the basis of the following finding: -
“These grounds agitate against the disallowance of deduction of Rs.1,91,97,051/- claimed u/s 35(2AB) of the Act. The fact related to this disallowance has already been discussed in earlier paragraphs.
During the appellate proceedings, in para 6 of the written submissions, the appellant has submitted that it had furnished the copies of Form No.3CLA and Form No. 3CM electronically along with other documents before the AO. He had produced the same before the appellate authority also. From a perusal of the same it is noticed that the said Form 3CM was valid from 01.04.2013 to 31.03.2017 for the purpose of section 35(2AB) of the Act.
Accordingly, the observation put forth by the AO cannot be accepted and therefore, the addition made by the AO is hereby deleted.
These grounds of appeal are, thus, allowed.”
In light of the relief given by the Ld. CIT(A) the Revenue is in appeal with the following grounds: -
“1.The learned Commissioner of Income Tax (Appeals) erred in deleting the disallowance of expenditure amounting to Rs.1,91,97,051/- claimed under section 35(2AB) of the Income-tax Act, 1961, without appreciating the fact that the assessee had not furnished Form 3CL from the Department of Scientific and Industrial Research (DS1R), which is a mandatory' requirement under Rule 6(7Ai of the Income Tax Rules, 1962. The same can be verified from the reply of the assessee dated 11-12-2019 where he has requested that Form 3CL is awaited and asked for adjournment till 20-12-2019 (copy of the reply attached as Annexure-1).
2.The learned CIT(A) erred in directing deletion of the addition made by the Assessing Officer, thereby ignoring the settled principle that burden lies on the assessee to substantiate its claim of deduction by producing mandatory approvals and reports from the prescribed authority,
3.The assessee has submitted the additional evidence during the Appellate proceedings and the Ld CIT(A) has accepted the additional evidence without seeking the comments of AO. Therefore, the order of Ld CIT(A) is perverse, contrary to law and facts, and deserves to be set aside, and the order of the Assessing Officer be restored.”
Before us the Ld. DR read out extensively from the Ld. AO’s order, especially paras 4.1 & 4.2 thereon. It was argued that the assessee never filed the necessary Form before the Ld. AO and this was allegedly proved by the fact that through a reply dated 11.12.2019 the assessee had requested for time to file the Form 3CL, as it was awaited. It was the argument that the assessee had filed fresh evidence before the Ld. CIT(A) and the Ld. CIT(A) had not called for any report from the Ld. AO even though Rule 46A makes it mandatory for the same. The Ld. DR relied on the case of Manish Build Well (P) Ltd. [2011] 16 taxmann.com 27 (Del). The Ld. DR argued that the Ld. CIT(A) had fallen in error in admitting new evidence without involving the Ld. AO. It was the submission that this matter should be remanded back to the file of Ld. AO for verifying the additional evidence.
Per contra, the Ld. AR argued with the help of a paper book and a case law compilation. It was argued that no new evidence was produced before the Ld. CIT(A) and certainly no application was moved under Rule 46A. In this case, the replies filed before the AO (placed at pages 43 to 48 of the Paper Book) demonstrated that Form 3CM, 3CLA, 3CL & 3CK were duly filed along with reply dated 12.02.2019. It was also pointed out that the audit report and Form 3CLA were filed with the return of income. It was mentioned that there was an approval in Form 3CM available with the assessee for the period 01.04.2013 to 31.03.2017 and the same could be seen at page 29 of the Paper Book. It was the submission that all these documents were duly before the Ld. AO and were sufficient for allowing necessary deduction u/s 35(2AB) of the Act for the relevant assessment year. It was also pointed out that for the immediately succeeding assessment year 2018-19 the Ld. AO had accepted the claim u/s 35(2AB) of the Act on the basis of the same set of documents as would be required for the present assessment year. The Ld. AR brought to our notice the assessment order for AY 2018-19 dated 16.04.2021 (placed at pages 49 to 50 of the paper book).
We have carefully considered the submissions of Ld. DR/AR. We have also gone through the records and the case laws before us. It is seen that the assessee has presented all documents for a claim u/s 35(2AB) for the present year. While there is some evidence of obfuscation when the assessee has himself stated in his reply dated 11.12.2019 that the Form 3CL was awaited, we are still not clear as to why and under what circumstances this reply was given to the Ld. AO. Be that as it may, it is clear that the assessee is in possession of the requisite Form 3CM applicable for the present year. There are enough documentary trails to show that this form was before the Ld. AO and thus, the finding of Ld. CIT(A) (supra) deserves to be upheld.
In the result, appeal of the Revenue is dismissed.