Akil Abdul Hamid Kureshi, J.

1. Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 22.12.2016 questioning the correctness of the view taken by the Tribunal. Considering the facts, we have heard learned counsel for the parties for final disposal of the tax appeal.

2. The respondent assessee is a company registered under the Companies Act and is engaged in the business of manufacture and sale of pharmaceutical products. The activities of the assessee included research and development activity for developing new drugs and formulation. On an expenditure incurred by the assessee on in-house research and development facility, the assessee claimed various deductions under section 35(2AB) of the. For the assessment year 2009-2010, the assessee had filed returns claiming such deduction. The Assessing Officer passed the order of assessment under section 143(3) of theon 30.1.2014 accepting the assessees claim.

3. The Commissioner of Income-tax was of the opinion that the Assessing Officer had not made proper inquiries before accepting the claim. After giving notice to the assessee, he passed an order dated 28.3.2016 under section 263 of theand held that the order of assessment was passed without proper verifications, investigation and examination. The same was therefore, erroneous and prejudicial to the interest of the Revenue. He therefore, directed the Assessing Officer to examine the issues discussed in the order and pass a fresh order of assessment in view of such discussion. In the process the Assessing Officer would also "consider correct amount of disallowable expenditure after considering the financial documents and other relevant details/submissions filed by the assessee and as available on record with a view to ensure that there is no discrepancy in the facts and figures on record." One of the main grounds which appealed to the Commissioner was that the prescribed authority had not sent the intimation in Form 3CL to the Revenue, in absence of which, according to the Commissioner, claim could not have been accepted.

4. The assessee approached the Tribunal. The Tribunal by the impugned judgment allowed the appeal inter-alia holding that the prescribed authority shall submit its report in relation to the approval of the in-house research and development in Form 3CL to the Director General of Income Tax (Exemption) within 60 days of its granting approval. In the opinion of the Tribunal, same was merely in form of intimation to be sent by the prescribed authority to the department. In case of the assessee, the research and development activity having already been approved in Form 3CM, the assessee thereafter, had no further role to play in the inter-departmental correspondence. The Tribunal therefore, held that the assessee was entitled to deduction on the capital and revenue expenses incurred on in-house research and development amounting to Rs. 237,77,05,310/-.

5. Having heard learned counsel for the parties and having perused the orders on record, we are broadly in agreement with the view of the Tribunal. Undisputedly, the research and development facility set up by the assessee was approved by the prescribed authority and necessary approval was granted in the prescribed format. The communication in Form 3CM was thereafter, between the prescribed authority and the department. If the same was not so, surely, the assessee cannot be made to suffer. To this extent, the Tribunal was perfectly correct and the Commissioner was not, in observing that in absence of such certification, claim of deduction under section 35(2AB) was not allowable. However, neither the prescribed authority nor the Assessing Officer has applied the mind as to the expenditure, be it revenue or capital in nature, actually incurred in developing the in-house research and development facility. To the limited extent, the Commissioner desired the Assessing Officer to verify such figures, we would allow the Assessing Officer to do so. In other words, in principle, we accept the Tribunals reasons and conclusions. Merely because the prescribed authority failed to send intimation in Form 3CL, would not be reason enough to deprive the assessees claim of deduction under section 35(2AB) of the. However, in facts of the present case, it would be open for the Assessing Officer to verify the actual expenditure incurred by the assessee.

6. To the limited extent, the order of the Tribunal is set aside. The proceedings shall be placed before the Assessing Officer for passing appropriate order. Tax Appeal is disposed of in above terms.