Appeal partly allowed on research deduction, benevolent expenses remanded for further examination.

The appeal was partly allowed for statistical purposes. The deduction claimed under section 35(2AB) for in-house scientific research was rejected as the expenses did not qualify as in-house research and development. However, the disallowance of benevolent expenses for business purposes was remanded to the Assessing Officer for further examination to determine the quantum of expenditure based on verified employee and employer contributions, as well as payments to legal heirs. The appellant was directed to provide comprehensive details for a proper decision.

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Issues:
1. Deduction claimed under section 35(2AB) for in-house scientific research.
2. Disallowance of benevolent expenses for business purpose.

Issue 1 - Deduction under section 35(2AB):
The appellant contested that the Learned CIT(A) erred in confirming the deduction of Rs. 22,29,121 under section 35(2AB) of the I.T. Act, arguing that the expenses were for certification purposes and not in-house scientific research. The details of expenses included payments to various entities and organizations. The Bench questioned how these expenses qualified as in-house research and development. The appellant's representative claimed proper approval was obtained, justifying the expenses. However, the Revenue supported the lower authorities' decisions. The Tribunal analyzed the details and found no evidence of in-house research activities. Merely obtaining approval and purchasing materials externally did not constitute in-house research and development as required by the Act. Consequently, the appellant's claim for weighted deduction under section 35(2AB) was rejected.

Issue 2 - Disallowance of benevolent expenses:
Regarding the disallowance of Rs. 7,91,600 as benevolent expenses, the appellant argued that these expenses were for business purposes, citing a Factory Order Part-II. The Bench sought clarification on the contributions made by the employees and the employer. The Tribunal acknowledged that the expenses for death relief to employees were indeed for business purposes as per the Factory Order. However, due to discrepancies in the details provided, the matter was remanded to the Assessing Officer for further examination. The Tribunal directed the Officer to assess the quantum of expenditure based on verified employee contributions, employer contributions, and payments to legal heirs. The appellant was instructed to provide comprehensive details for a proper decision. Ultimately, the Tribunal allowed the appeal on this ground for statistical purposes.

In conclusion, the appeal was partly allowed for statistical purposes, with the first issue of deduction under section 35(2AB) being rejected, and the second issue of benevolent expenses being remanded for further assessment by the Assessing Officer.

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