High Court Of Punjab & Haryana
CIT vs. F.C.S. International Marketing (P) Ltd.
Sections 35(1)(iv), 35(2), 35(3)
Asst. Year 1985-86
D.K. Jain, C.J. & Hemant Gupta, J.
IT Appeal No. 260 of 2005
29th August, 2005
Counsel Appeared
Dr. N.L. Sharda, for the Appellant : None, for the Respondent
JUDGMENT
D.K. Jain, C.J. :
This appeal by the Revenue under s. 260A of the IT Act, 1961 (for short “the Act”), is directed against order dt. 31st Dec., 2004, passed by the Tribunal, Amritsar Bench, Amritsar, in ITA No. 118/Asr/1999 pertaining to the asst. yr. 1985-86 [reported as F.C.S. International Marketing (P) Ltd. vs. Asstt. CIT (2006) 102 TTJ (Asr) 1098— Ed.]. According to the Revenue, the said order gives rise to the following substantial questions of law :
“1. Whether, on the facts and in the circumstances of the case, the learned Tribunal was right in law in allowing expenditure not incurred in the previous year in view of s. 35(2)(ia) of the Act ?
2. Whether, on the facts and in the circumstances of the case, reference was required to be made to the prescribed authority before making the disallowance ?”
2. Briefly stated, the facts giving rise to the present appeal are as follows. While computing the net profit for the relevant previous year, the assessee claimed a deduction of Rs. 4,65,579 as expenditure incurred on scientific research. During the course of the assessment proceedings for the said assessment year, the AO disallowed the said expenditure. The matter travelled to the Tribunal (ITA No. 466/Asr/1989). The Tribunal, vide its order dt. 24th Sept., 1993, accepted the contention of the assessee to the effect that, as per the provisions of s. 35(3) of the Act, before making any disallowance for the claim made under s. 35(2)(a) of the Act, the question whether the expenditure incurred by the assessee on scientific research actually constituted an expenditure on scientific research had to be referred to the prescribed authority. Accordingly, the Tribunal set aside the disallowance and restored the matter to the AO to enable him to take appropriate further steps in the matter. However, even in the second round, the AO did not seek the opinion of the specified authority and proceeded to disallow the claim made by the assessee. On appeal, the CIT(A) upheld the disallowance. Being aggrieved, the assessee carried the matter further in appeal to the Tribunal. By the impugned order, the Tribunal has allowed the assessee’s appeal. Hence, the present appeal.
3. Assailing the order, Dr. Sharda, learned counsel for the Revenue, has submitted that the AO had disallowed the claim subject to the final opinion by the specified authority. Learned counsel asserts that since the opinion of the prescribed authority had not been received even on reference being made by the assessee, the AO had no option but to make the disallowance.
We are unable to agree with learned counsel. It is manifestly clear from the impugned order that the Tribunal’s conclusion that the AO was duty-bound to refer the matter to the specified authority for its opinion, not only because of a specific direction to that effect by the Tribunal in its earlier order but also on account of the provisions of sub-s. (3) of s. 35 of the Act. It provides that if any question arises under this section as to whether, and if so, to what extent, any activity constituted, or any asset was being used for scientific research, the Board shall refer the question to the prescribed authority, whose decision shall be final. The AO was duty-bound to strictly comply with the statutory provisions as also the direction by the Tribunal. Admittedly, no such reference was made by the AO and, therefore, there was no occasion for the Board also to refer the same to the prescribed authority. In view of the said factual scenario, no fault can be found with the impugned order. An assessee is not expected to undergo the process of an endless litigation on account of inaction on the part of the AO. In our opinion, no question of law, much less a substantial question of law, arises from the impugned order.
Accordingly, we decline to entertain the appeal. Dismissed.
[Citation : 283 ITR 32]
