2012 (7) TMI 1094 - AT - Income Tax

Tribunal allows R&D deduction under section 35(2AB) upon DSIR approval &D

The Tribunal remanded the case to the Assessing Officer, directing that if the appellant secures approval from DSIR for in-house R&D, the claim for ... - Issues involved: Appeal against disallowance of weighted deduction u/s.35(2AB) for capital expenditure in research and development.Summary:The appellant filed an appeal against the order of the ld CIT(A) for the assessment year 2005-06, contending that the disallowance of weighted deduction u/s.35(2AB) for capital expenditure in research and development was erroneous due to the lack of approval from the Secretary, DSIR in Form 3CM.During the hearing, the appellant's representative submitted that the appellant had applied for recognition of in-house R&D units to the DSIR, providing relevant documents. It was highlighted that the appellant had received recognition from DSIR, valid until 31.3.2007, with a renewal approved until 31.3.2009. The approval in Form 3CM was pending, and efforts were ongoing to obtain it. Reference was made to the approval granted to the appellant's sister concern under section 35(2AB) by DSIR. The appellant requested the matter to be remanded to the AO for consideration based on the expected approval from DSIR. The Departmental Representative had no objection to this course of action.Considering the submissions and the appellant's efforts to secure approval from DSIR for in-house R&D facility, the Tribunal deemed it appropriate to remand the matter to the AO. The direction was given that if the appellant obtains approval from DSIR, the claim for deduction u/s.35(2AB) should be allowed in accordance with the provisions of the Act. Consequently, the grounds of appeal raised by the appellant were upheld, and the appeal was treated as allowed for statistical purposes.The judgment was pronounced in the open court on 18th July 2012.