Income Tax Appellate Tribunal - Chandigarh
Ind Swift Laboratories Ltd.,, ... vs Assessee on 3 October, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIG ARH BENCHES ' A' CHANDIG ARH
BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND
Ms. SUSHMA CHOWLA, JUDICI AL MEMBER
ITA No. 771/CHD/2008
Assessment Year: 2005-06
M/s. Ind Swift Laboratories Ltd. Vs. The Addl. CIT
SCO 493-494 Circle 4(1)
Sector 35-C Chandigarh
Chandigarh
PAN No. AAJFM7090F
(Appellant) (Respondent)
Appellant By : Shri T.N. Singla
Respondent By : Smt. Jyoti Kumari
Date of hearing : 03/10/2013
Date of Pronouncement : 7/11/2013
ORDER
PER T.R.SOOD, A. M. This is an appeal filed by the assessee against the order dated 03/07/2008 of CIT (Appeals), Chandigarh.
2. Following grounds have been raised in this appeal:-
1. Th at t h e or de r of L ear ne d C .I .T. ( A p pe a ls ) is ba d a g ai ns t th e f ac ts & L aw .
2. Th at t h e L e ar n e d C o m mis s i o ner of Inc o m e Tax ( A pp e a ls ) h as er r ed i n u ph o ld i n g t h at th e pr ov is i o ns of s . 4 0( a ) ( i a) o f t h e Ac t ar e ap p l ic a b l e o n a m ou n t of Rs . 1 3 50 0 00 0 /- ac t u al ly pa i d by th e ap p e ll a nt to M/ s I n d- Sw i ft Li m i te d f or tec h nic a l c ons u lt a nc y wi t ho ut a p pr ec i at i n g t he f ac t th a t t he pr ov i s i ons of s . 40( a) ( i a) of th e Ac t ar e o n ly ap p l i c ab l e in c as e o f ex p e ns e p ay a b l e a t t h e e n d of y e ar a nd d oes n o t ap p ly wh er e a mo u nt h as ac t ua l ly b ee n p a id by th e as s es s ee .
3. Th at t h e L e ar n e d C o m mis s i o ner of Inc o m e Tax ( A pp e a ls ) h as wr o n g ly g av e d ir ec ti ons t o t h e L e ar n e d As s es s in g O ff ic er t o d is a l l ow t he i nt er es t ex p e ns e as pe r Ru l e 8D o f t he I nc om e Tax Ru l es 1 96 2.
4. Th at t h e L e ar n e d C o m mis s i o ner of Inc o m e Tax ( A pp e a ls ) h as wr o n g ly g av e d ir ec ti ons t o t h e L e ar n e d As s es s in g O ff ic er t o d is a l l ow a dm i n is tr at iv e ex p ens es , o th er ex p e ns es a nd de pr ec ia t io n as p er R u l e 8D o f t he I nc om e T ax Ru l es 1 96 2 .
5. Th at t h e L e ar n e d C o m mis s i o ner of Inc o m e Tax ( A pp e a ls ) h as er r ed i n up h ol d i ng th e dis a l l ow anc e m a de by th e Le ar n ed As s es s i n g O ff ic er of ex pe n d it ur e inc ur r e d am o un t in g t o Rs . 50 0 00 0 /- by t h e a pp e l l an t o n a dv e r t is em e nt an d p ub l ic i ty o n th e ev e n t of In d o P ak G a mes . T he Le ar n ed C o m mis s i o ner of Inc o me Tax ( A pp e als ) h as f a i l ed to tak e c og n i za nc e o f p r ov is i ons of s .
40( a) ( i a) of t he Ac t a s th e s a i d am o un t wa s ac t u a l ly p a i d by t h e 2 ap p e ll a nt a nd was n ot pay a b le an d pr ov is i o ns o f s . 4 0( a) ( i a) of th e Ac t ar e ap p l ic a b le on l y i n c as e o f am o u nt p a y ab l e.
6. Th at t h e L e ar n e d C o m mis s i o ner of Inc o m e Tax ( A pp e a ls ) h as wr o n g ly d is a ll o we d t h e w e ig h ed d ed uc ti o n u nd er s . 3 5( 2 A B) o f t h e Ac t t o t he ex t en t o f Rs . 14 0 16 4 51 4 .
3 Ground No. 1 is of general nature and does not need separate adjudication.
4 Ground No. 2 - After hearing both the parties we find that during assessment proceedings AO noticed that assessee has made payment to M/s Ind Swift Laboratories Ltd. on account of Technical consultancy against which TDS was not deducted and therefore the amount was added to the income of assessee under section 40(a)(ia).
5 Before Ld. CIT(A) it was mainly submitted that the word 'payable' used in the section clearly denotes that TDS provisions are applicable if the amount remain payable in case the amount have been paid as in the present case then TDS provisions are not applicable. However Ld. CIT(A) did not find force in this submission and confirmed the addition.
6 Before us Ld. Counsel of the assessee relied on the decision of special bench in case of Merilyn Shipping and Transport V. ACIT reported in 146 TTJ 1, on the other hand Ld. DR strongly relied on the decision of Hon'ble Gujarat High Court in case of CIT Vs. SikandarKhan & Ors. (87 DTR 137).
7 After hearing both the parties we find that decision of special bench has been reversed by the Hon,ble Gujarat High Court in case of CIT Vs. SikandarKhan & Ors. (87 DTR 137). The same view has been taken even by Hon'ble Kolkata High Court in case of CIT Vs. Crescent Export Syndicate (216 Taxman 258). The decision of Hon'ble Gujarat High Court has been followed by Chandigarh Bench of the Tribunal in following paras:
"24 What this Sub-Section, therefore, requires is that there should be an `amount payable in the nature described above, which is such on which tax is deductible at source under Chapter XVII-B but such tax has not been deducted or if deducted not paid before the due date. This provision no-where requires that the amount which is payable must remain so payable throughout during the year. To reiterate the provision has certain strict and stringent requirements before the unpleasant consequences envisaged therein can be applied. We are prepared to and we are duty bound to interpret such requirements strictly. Such requirements, however, cannot be enlarged by any addition or subtraction of words not used by the legislature. The term used is interest, commission, brokerage etc. is payable to a resident or amounts payable to a contractor or sub-contractor for carrying out any work. The language used is not that such amount must continue to remain payable till the end of the accounting year. Any such interpretation would require reading words which the legislature has not used. No such interpretation would even otherwise be justified because in our opinion, the legislature could not have intended to bring about any such distinction nor the language used in the section brings about any such meaning. If the interpretation as advanced by the assessees is accepted, it would lead to a situation where the assessee who though was required to deduct the tax at 3 source but no such deduction was made or more flagrantly deduction though made is not paid to the Government, would escape the consequence only because the amount was already paid over before the end of the year in contrast to another assessee who would otherwise be in similar situation but in whose case the amount remained payable till the end of the year. We simply do not see any logic why the legislature would have desired to bring about such irreconcilable and diverse consequences. We hasten to add that this is not the prime basis on which we have adopted the interpretation which we have given. If the language used by the Parliament conveyed such a meaning, we would not have hesitated in adopting such an interpretation. We only highlight that we would not readily accept that the legislature desired to bring about an incongruous and seemingly irreconcilable consequences. The decision of the Supreme Court in the case of Commissioner of Income-Tax, Gujarat vs. Ashokbhai Chimanbhai (supra), would not alter this situation. The said decision, of course, recognizes the concept of ascertaining the profit and loss from the business or profession with reference to a certain period i.e. the accounting year. In this context, last date of such accounting period would assume considerable significance. However, this decision nowhere indicates that the events which take place during the accounting period should be ignored and the ascertainment of fulfilling a certain condition provided under the statute must be judged with reference to last date of the accounting period. Particularly, in the context of requirements of Section 40(a)(ia) of the Act, we see no warrant in the said decision of the Supreme Court to apply the test of payability only as on 31st March of the year under consideration. Merely because, accounts are closed on that date and the computation of profit and loss is to be judged with reference to such date, does not mean that whether an amount is payable or not must be ascertained on the strength of the position emerging on 31st March.
25. This brings us to the second aspect of this discussion, namely, whether this is a case of conscious omission and therefore, the legislature must be seen to have deliberately brought about a certain situation which does not require any further interpretation. This is the fundamental argument of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT(supra) to adopt a particular view.
26. While interpreting a statutory provision the Courts have often applied Hyden s rule or the mischief rule and ascertained what was the position before the amendment, what the amendment sought to remedy and what was the effect of the changes.
27. In the case of Bengal Immunity Co. Ltd. vs. State of Bihar and others reported in AIR 1955 SC 661, the Apex Court referred to the famous english decision in Hyden s case wherein while adopting restrictive or enlarging interpretation, it was observed that four things are to be considered, (1) what was the common law before making of the act (2) what was the mischief and defect in which the common law did not provide. (3) what remedy the Parliament had resolved and adopted to cure the disease and (4) true reason of the remedy.
28. In such context, the position prevailing prior to the amendment introduced in Section 40(a) would certainly be a relevant factor. However, the proceedings in the Parliament, its debates and even the speeches made by the proposer of a bill are ordinarily not considered as relevant or safe tools for interpretation of a statute. In the case of Aswini Kumar Ghose and another vs. Arabinda Bose and another reported in A.I.R. 1952 SC 369 in a Constitution Bench decision of (Coram: Patanjali Sastri, C.J.), observed that:-
33. &..It was urged that acceptance or rejection of amendments to a Bill in the course of Parliamentary proceedings forms part of the pre-enactment history of a statute and as such might throw valuable light on the intention of the Legislature when the language used in the statue admitted of more than one construction. We are unable to assent to this preposition.
The reason why a particular amendment was proposed or accepted or rejected is often a matter of controversy, as it happened to be in this case, and without the speeches 4 bearing upon the motion, it cannot be ascertained with any reasonable degree of certainty. And where the Legislature happens to be bicameral, the second Chamber may or may not have known of such reason when it dealt with the measure. We hold accordingly that all the three forms of extrinsic aid sought to be resorted to by the parties in the case mus be excluded from consideration in ascertaining the true object and intention of the Legislature.
29. In yet another Constitution Bench judgment in the case of A.K.Gopalan vs. State of Madras reported in AIR 1950 SC 27, it was observed as under:-
17.....The result appears to be that while it is not proper to take into consideration the individual opinions of members of Parliament or Convention to construe the meaning of the particular clause, when a question is raised whether a certain phrase or expression was up for consideration at all or not, a reference to the debates may be permitted.
30. In the case of Express Newspaper (Private) Ltd. and another vs. The Union of India and others reported in AIR 1958 SC 578, N.H.Bhagwati, J., observed as under:-
173. We do not propose to enter into any elaborate discussion on the question whether it would be competent to us in arriving at a proper construction of the expression fixing rates of wages to look into the Statement of Objects and Reasons attached to the Bill No.13 of 1955 as introduced in the Rajya Sabha or the circumstances under which the word minimum came to be deleted from the provisions of the Bill relating to rates of wages and the Wage Board and the fact of such deletion when the act came to be passed in its present form. There is a consensus of opinion that these are not aids to the construction of the terms of the Statute which have of course to be given their plain and grammatical meaning ( See:
Ashvini Kumar ghosh v. Arabinda Bose, 1953 SC R 1:(AIR 1952 SC 369) (Z24) and Provat Kumar Kar v. William Trevelyan Curtiez Parker, AIR 1950 Cal 116 (Z25). It is only when the terms of the statute are ambiguous or vague that resort may be had to them for the purpose of arriving at the true intention of the Legislature.
31. It can thus be seen that the debates in the Parliament are ordinarily not considered as the aids for interpretation of the ultimate provision which may be brought into the statute. The debates at best indicate the opinion of the individual members and are ordinarily not relied upon for interpreting the provisions, particularly when the provisions are plain. We are conscious that departure is made in two exceptional cases, namely, the debates in the Constituent Assembly and in case of Finance Minister s speech explaining the reason for introduction of a certain provision. The reason why a certain language was used in a draft bill and why the provision ultimately enacted carried a different expression cannot be gathered from mere comparison of the two sets of provisions. There may be variety of reasons why the ultimate provision may vary from the original draft. In the Parliamentary system, two Houses separately debate the legislations under consideration. It would all the more be unsafe to refer to or rely upon the drafts, amendments, debates etc for interpretation of a statutory provision when the language used is not capable of several meanings. In the present case the Tribunal in case of M/s. Merilyn Shipping & Transports vs. ACIT (supra) fell in a serious error in merely comparing the language used in the draft bill and final enactment to assign a particular meaning to the statutory provision.
32. It is, of course, true that the Courts in India have been applying the principle of deliberate or conscious omission. Such principle is applied mainly when an existing provision is amended and a change is brought about. While interpreting 5 such an amended provision, the Courts would immediately inquire what was the statutory provision before and what changes the legislature brought about and compare the effect of the two. The other occasion for applying the principle, we notice from various decisions of the Supreme Court, has been when the language of the legislature is compared with some other analogous statute or other provisions of the same statute or with expression which could apparently or obviously been used if the legislature had different intention in mind, while framing the provision. We may refer to some of such decisions presently. In the case of Bhuwalka Steel Industries Ltd. vs. Bombay Iron and Steel Labour Board reported in AIR 2010 (Suppl.) 122, the Apex Court observed as under:-
"The omission of the words as proposed earlier from the final definition is a deliberate and conscious act on the part of the legislature, only with the objective to provide protection to all the labourers or workers, who were the manual workers and were engaged or to be engaged in any scheduled employment. Therefore, there was a specific act on the part of the legislature to enlarge the scope of the definition and once we accept this, all the arguments regarding the objects and reasons, the Committee Reports, the legislative history being contrary to the express language, are relegated to the background and are liable to be ignored.
33. In the case of Agricultural Produce Market Committee, Narela, Delhi vs. Commissioner of Income Tax and anr. reported in AIR 2008 SC(Supplement) 566, the Supreme Court noticed that prior to Finance Act, 2002, the Income Tax Act did not contain the definition of words Local Authority . The word came to be defined for the first time by the Finance Act of 2002 by explanation/ definition clause to Section 10(20) of the Act. It was further noticed that there were significant difference in the definition of term local authority contained under Section 3(31) of the General Clauses Act, 1987 as compared to the definition clause inserted in Section 10(20) of the Income Tax Act, 1961 vide Finance Act, of 2002. In this context it was observed that:-
27. Certain glaring features can be deciphered from the above comparative chart. Under Section 3(31) of the General Clauses Act, 1897, local authority was defined to mean a municipal committee, district board, body of port commissioners or other authority legally entitled to the control or management of a municipal or local fund. The words other authority in Section 3(31) of the 1897 Act has been omitted by Parliament in the Explanation/ definition clause inserted in Section 10(20) of the 1961 Act vide Finance Act, 2002. Therefore, in our view, it would not be correct to say that the entire definition of the word local authority is bodily lifted from Section 3(31) of the 1897 Act and incorporated, by Parliament, in the said Explanation to Section 10(20) of the 1961 Act. This deliberate omission is important.
34. The Apex Court in the case of Greater Bombay CO-operative Bank Ltd. vs. M/s. United Yarn Tex.Pvt.Ltd & Ors. reported in AIR 2007 SC 1584, in the context of question whether the Cooperative Banks transacting business of banking fall within the meaning of banking company defined in the Banking Regulation Act, 1949, observed as under:-
59. The RDB Act was passed in 1993 when Parliament had before it the provisions of the BR Act as amended by Act No.23 of 1965 by addition of some more clauses in Section 56 of the Act. The Parliament was fully aware that the provisions of the BR Act apply to co-operative societies as they apply to banking companies. The Parliament was also aware that the definition of banking company in Section 5(c) had not been altered by Act No.23 of 1965 and it was kept intact, and in fact additional definitions were added by Section 56(c). Co-operative bank was separately defined by the newly inserted clause (cci) and primary co-operative bank was similarly separately defined by clause (ccv). The Parliament was simply assigning a meaning to words; it was not incorporating or even referring to the substantive provisions of the BR Act. The meaning of 6 banking company must, therefore, necessarily be strictly confined to the words used in Section 5(c) of the BR Act. It would have been the easiest thing for Parliament to say that banking company shall mean banking company as defined in Section 5(c) and shall include co-operative bank as defined in Section 5(cci) and primary co-operative bank as defined in Section 5(ccv). However, the Parliament did not do so. There was thus a conscious exclusion and deliberate commission of co-operative banks from the purview of the RDB Act. The reason for excluding co-operative banks seems to be that co-operative banks have comprehensive, self-contained and less expensive remedies available to them under the State Co-operative Societies Acts of the States concerned, while other banks and financial institutions did not have such speedy remedies and they had to file suits in civil courts.
35. In the case of National Mineral Development Corporation Ltd. vs. State of M.P and another reported in AIR 2004 SC 2456, the Apex Court observed as under:-
29. The Parliament knowing it full well that the iron ore shall have to undergo a process leading to emergence of lumps, fines, concentrates and slimes chose to make provision for quantification of royalty only by reference to the quantity of lumps, fines and concentrates. It left slimes out of consideration. Nothing prevented the Parliament from either providing for the quantity of iron ore as such as the basis for quantification of royalty. It chose to make provision for the quantification being awaited until the emergence of lumps, fines and concentrates. Having done so the Parliament has not said fines including slimes . Though slimes are not fines the Parliament could have assigned an artificial or extended meaning to fines for the purpose of levy of Royalty which it has chosen not to do. It is clearly suggestive of its intention not to take into consideration slimes for quantifying the amount of royalty. This deliberate omission of Parliament cannot be made good by interpretative process so as to charge royalty on slimes by reading Section 9 of the Act divorced from the provisions of the Second Schedule. Even if slimes were to be held liable to charge of royalty, the question would still have remained at what rate and on what quantity which questions cannot be answered by Section 9.
36. In the case of Gopal Sardar, vs. Karuna Sardar reported in AIR 2004 SC 3068, the Apex Court in the the context of limitation within which right of preemption must be exercised and whether in the context of the relevant provisions contained in West Bengal Land Reforms and Limitation Act, 1963 applied or not, observed as under:-
8....Prior to 15-2-1971, an application under Section 8 was required to be made to the Revenue Officer specifically empowered by the State Government in this behalf. This phrase was substituted by the phrase Munsif having territorial jurisdiction by the aforementioned amendment. Even after this amendment when an application is required to be made to Section 8 of the Act either to apply Section 5 of the Limitation act or its principles so as to enable a party to make an application after the expiry of the period of limitation prescribed on showing sufficient cause for not making an application within time.
The Act is of 1955 and for all these years, no provision is made under Section 8 of the Act providing for condonation of delay. Thus, when Section 5 of the Limitation Act is not made applicable to the proceedings under Section 8 of the Act unlike to the other proceedings under the Act, as already stated above, it is appropriate to construe that the period of limitation prescribed under Section 8 of the Act specifically and expressly governs an application to be made under the said section and 7 not the period prescribed under Article 137 of the Limitation Act.
37. In our opinion, the Tribunal committed an error in applying the principle of conscious omission in the present case. Firstly, as already observed, we have serious doubt whether such principle can be applied by comparing the draft presented in Parliament and ultimate legislation which may be passed. Secondly, the statutory provision is amply clear.
38. In the result, we are of the opinion that Section 40(a)(ia) would cover not only to the amounts which are payable as on 31th March of a particular year but also which are payable at any time during the year. Of course, as long as the other requirements of the said provision exist. In that context, in our opinion the decision of the Special Bench of the Tribunal in the case of M/s. Merilyn Shipping & Transports vs. ACIT(surpa), does not lay down correct law.
39. We answer the questions as under:-
Question (1) in the negative i.e. in favour of the Revenue and against the assessees.
Question (2) also in the negative i.e. in favour of the Revenue and against the assessees. "
Thus it is clear that Hon'ble Gujarat High Court has considered all aspects of the issues raised in the decision of Special Bench in case of Merilyn Shipping Transporters V. ACIT (supra). W e further find that that even Hon'ble Calcutta High Court has overruled this decision in case of CIT Vs. Cresent Export Syndicate. Moreover Chandigarh Bench of the Tribunal consistently has been following the decision of Hon'ble Gujarat High Court in case of CIT V. Sikandarkhan N Tunwar and others (supra) as well as the decision of Hon'ble Calcutta High Court in case of CIT Vs. Cresent Export Syndicate (supra).
Therefore, following the above decision we decide this issue against the assessee.
8 Ground No. 3 and 4 - These two grounds relates to the issue of disallowance under section 14A.
9 After hearing both the parties we find that during the assessment proceeding it was noticed that assessee has made investment in Ind Swift Lab USA amounting to Rs. 181.22 lacs AO invoked the provision of Section 14 A read with rule 8D and disallowed a sum of Rs. 14,16,574/-. On appeal the disallowance was confirmed by Ld. CIT(A).
810 Before us it was mainly submitted that Hon'ble Bombay High Court has clearly held in case of Godrej & Boyce Manufacturing Vs. DCIT, 328 ITR 81 (Bom) that rule 8D cannot be applied retrospectively. Therefore it is clear that Rule 8D is not applicable in the present assessment year i.e. AY 2005-06.
11 On the other hand Ld. DR submitted that in the same judgment of Hon'ble Bombay High Court has also held that reasonable disallowance can be made even in the earlier years.
12 W e have considered the rival submission carefully and find that Hon'ble Bombay High Court in case of Godrej And Boyce Mfg. Co. Ltd. V. Deputy CIT and Another (supra) has clearly held Rule 8D is applicable from AY 2008-09. Therefore this rule cannot be applied in the present case which is for assessment year 2005-06. At the same time reasonable disallowances has to be made. Considering over all fact of the case we are of the opinion that disallowance of Rs. 1 Lac would meet the ends of justice. Accordingly we set aside the order of Ld. CIT (A) and direct AO to make disallowance of Rs.
1 Lac under section 14 A. 13 Ground No. 5 - After hearing both the parties we find that during assessment proceeding AO noticed that assessee has incurred sum of Rs. 5.00 Lacs towards advertisement. It was claimed that said amount was given for Indo Pak games, no evidence was filed. Therefore AO was of the opinion that this expenditure has not been substantiated. In any case alternatively it was observed that since TDS has not been deducted, disallowance has to be made even under section 40(a)(ia). On appeal the addition was confirmed by Ld. CIT(A).
14 Before us similar arguments were made by both the parties as in respect of ground no. 1. After considering the 9 rival submission we find that no TDS has been deducted on advertisement expenses. Therefore clearly provisions of Section 40(a)(ia) would be attracted. Further in any case no evidence has been filed before AO or Ld. CIT(A) or even before us to substantiate the claim of this expenditure and therefore we find nothing wrong with the order of Ld. CIT(A) and confirm the same.
15 Ground No. 6 - After hearing both the parties we find that during assessment proceeding it was noticed that assessee has claimed weighed deduction @150% in respect of revenue and capital expenditure incurred on Research and Development activities. The assessee was asked to justif y the expenditure. Initially it was submitted that assessee was engaged in the business of manufacturing of pharmaceuticals and the expenditure was incurred for in house research for Research and Development and company has also furnished an application in Form 3CK for approval of the in house research for Research and Development, therefore conditions are satisfied. AO was not impressed with this initial reply and once again asked assessee to give detailed justification for the claim. No further details were filed. It was observed that since assessee has not filed any evidence to substantiate the claim that it satisfy the condition laid in the Section 35(2AB). It was also observed that making of application in Form 3CK is not sufficient for allowing of claim. Accordingly weighted deduction amounting to Rs. 14,01,64,514/- was disallowed.
16 On appeal the Ld. CIT(A) confirmed the disallowance.
17 Before us the Ld. Counsel for the assessee reiterated the submission made before AO. On the other hand Ld. DR strongly supported the order of the CIT(A).
18` After considering rival submission we find that Ld. CIT(A) has decided this issue vide Para 46 to 48 which are as under:
" 46 I have considered the submissions of the assessee. I find that there is no law point involved. To decide this issue, there has to be enquiry into the facts. The assessee can agitate the matter under additional ground of appeal if a law point is involved. Moreover, the order of approval has been given w.e.f. 1/04/2006 till 31/03/2010 which does not fall in the A.YT. 2005-06.10
47 The assessee has relied upon the decision of Hon'ble ITAT Ahmedabad Bench in 112 ITD 307 wherein Hon'ble ITAT held that entire expenditure should be allowed even though in that case the approval was granted only w.e.f. 27/02/2001. The Hon'ble ITAT held that here is no provisions under the Act to grant approval w.e.f a certified date when the assessee has filed the application in time. In that case, the assessee had made an application vide letter dated 07/08/2000 and the approval was granted w.e.f. 27/02/2001.
48 In my opinion, the facts of the present case are different and distinguishable. In the case of Claris Life Science Ltd., 112 ITD 307(Ahd), the assessee had made an application prior to the date of approval whereas for the present case, the assessee made application on 08/01/2007 and the approval was granted retrospectively w.e.f 01/04/2006. Moreover, the prescribed authority has to satisfy himself on the basis of the data supplied by the assessee. The assessee has attached the details which are to be submitted for getting the approval. Certain data is supplied to the prescribed authority. The prescribed authority examines the details of the data and then comes to a conclusion. In the present case, the prescribed authority after examining the case granted the approval and that too w.e.f. 01/04/2006. Now the question arises, there has to be an enquiry as to why the prescribed authority did not grant the approval for the A.Y. 2005-06. The approval is not a mere formality. The prescribed authority has to go through the entire data supplied by the assessee and satisfy himself. Since there has to be an enquiry into the facts as to why the prescribed authority did not grant approval for the A.Y. 2005-06, then this additional ground of appeal cannot be called as a legal issue. Moreover, if the assessee has any grievance against the approval granted by the prescribed authority for redressal of the grievance. In the case of Claris Life Science Ltd., 112 ITD 307"(Ahd), the assessee has taken the original ground of appeal are different. In the additional ground of appeal, the assessee has to make out a case that it is certainly a legal issue. As I have already held that it is not a legal issue, the additional ground of appeal raised by the assessee is dismissed."
19 We find the Ld. CIT(A) has correctly adjudicated the issue. Even before us, no further evidence was filed to substantiate the claim of the assessee. Therefore we confirm the order of Ld. CIT(A).
20 In the result, appeal of the assessee is partly allowed.
Order Pronounced in the Open Court on this 7.11.2013 Sd/- Sd/-
(SUSHMA CHOWLA) (T.R.SOOD) JUDICI AL MEMBER ACCOUNTANT MEMER Dated : 7/11/2013 SURESH
Copy to: The Appellant/The Respondent /The CIT/The CIT(A)/The DR 11