Revenue's Appeal Dismissed on Deduction Issue

The appeal by Revenue against CIT(A) order for assessment year 2001-02 regarding deduction u/s 35(1)(iv) of the Income Tax Act was dismissed. The Tribunal found that the withdrawal statement by the Chairman was specific to certain group companies and not applicable to the assessee, who provided evidence of expenditure on scientific research. The Tribunal upheld the CIT(A)'s decision in favor of the assessee, noting the continuous research and development required for the nature of their business and previous acceptance of similar claims in past assessments. The order was pronounced on 14.10.2011.

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Issues involved: Appeal by Revenue against CIT(A) order for assessment year 2001-02 regarding deduction u/s 35(1)(iv) of the Income Tax Act.

Summary:
The Revenue contended that the CIT(A) erred in allowing the deduction under S.35(1)(iv) based on the Chairman's statement withdrawing the claim. They argued that the assessee was not engaged in genuine R&D work but only quality control. The assessee, on the other hand, maintained that the withdrawal statement did not apply to them as a separate legal entity and that they conducted R&D activities at their own factory premises. They provided evidence of expenditure on scientific research to support their claim. The Tribunal examined the sworn statement of the Chairman and found that the claim withdrawal was specific to certain group companies and not the assessee. The Tribunal also noted that the assessing officer did not refute the assessee's claim of conducting R&D at their factory premises. The Tribunal held that the nature of the assessee's business required continuous research and development, and previous assessments had accepted similar claims. Therefore, the Tribunal confirmed the CIT(A)'s decision in favor of the assessee, rejecting the Revenue's grounds of appeal.

In conclusion, the appeal by the Revenue was dismissed, and the order was pronounced on 14.10.2011.

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