Capital expenditure deduction for research facilities fails where acquisition for a research unit is not proved on the evidence.

Deduction for capital expenditure under section 35(1)(iv) was unavailable because the assessee did not prove that the lands were acquired for setting up a research laboratory or research unit. The Madras property lacked independent evidence of research and development use and was partly used for administrative purposes, while the Gujarat land was not shown to have been acquired and used for a research unit. The plea based on deemed possession under section 53 of the Transfer of Property Act did not change the factual position. The Tribunal's findings were based on appreciation of evidence, so no referable question of law arose.

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Issues: Whether the assessee was entitled to deduction of expenditure on lands claimed as capital assets acquired for setting up a research laboratory under section 35(1)(iv) of the Income-tax Act, 1961, and whether any referable question of law arose from the Tribunal's refusal to allow the claim.

Analysis: The deduction under section 35(1)(iv) was available only where the capital asset was acquired for the purpose of setting up a research laboratory. On the materials before the authorities, the assessee produced no independent evidence to show that the Madras property was purchased for research and development purposes, and part of it was used for administrative purposes. As regards the Gujarat land, the assessee failed to establish that it had been acquired and used for setting up a research unit, and the plea based on deemed possession under section 53 of the Transfer of Property Act, 1882, did not alter the factual position. The Tribunal's conclusions rested on appreciation of facts and evidence.

Conclusion: The claim for deduction under section 35(1)(iv) was rightly disallowed, and no referable question of law arose.

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