Tribunal grants weighted deductions under Section 35(2AB) for AY 2011-12 and AY 2012-13.

The Tribunal allowed the appeals for AY 2011-12 and AY 2012-13, directing the A.O to allow the weighted deductions claimed under Section 35(2AB) of the Income-tax Act, 1961. The appeal filed by the revenue for AY 2011-12 was dismissed. The Tribunal's decision was based on the recognition of the R&D facilities by DSIR and legal precedents supporting the assessee's claim for weighted deductions.

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Issues Involved:
1. Denial of exemption under Section 35(2AB) of the Income-tax Act, 1961.
2. Allowance of deductions under Sections 35(1)(i) and 35(1)(iv) of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Denial of exemption under Section 35(2AB) of the Income-tax Act, 1961:

The assessee, engaged in manufacturing enzymes, claimed a weighted deduction for R&D expenditure under Section 35(2AB) of the Income-tax Act, 1961. The R&D facilities were recognized by the Department of Scientific and Industrial Research (DSIR). However, the Assessing Officer (A.O) denied the deduction on the grounds that the R&D facilities were not approved by the Secretary, DSIR, and the necessary approval in Form 3CM was not available for the assessment year in question.

The assessee argued that their R&D facilities had been recognized by DSIR since AY 2001-02 and had continuously claimed deductions up to AY 2008-09, which were accepted by the department. The CIT(A) upheld the A.O's decision, stating that approval from the Secretary, DSIR, was mandatory for claiming the weighted deduction.

Upon appeal, the Tribunal found that the issue was covered in favor of the assessee by its own case for AY 2010-11, where it was held that once the R&D facility is recognized by the competent authority, deductions under Section 35(2AB) cannot be denied merely because the approval of expenditure in the prescribed form was not received.

The Tribunal noted that the R&D facilities were initially recognized by the DSIR and that the assessee had filed an application for approval, which was pending. The Tribunal emphasized that the existence of the R&D facility and its recognition by the competent authority were sufficient for claiming the deduction. The Tribunal directed the A.O to allow the weighted deduction under Section 35(2AB).

2. Allowance of deductions under Sections 35(1)(i) and 35(1)(iv) of the Income-tax Act, 1961:

The revenue challenged the CIT(A)'s decision to allow deductions under Sections 35(1)(i) and 35(1)(iv), despite the assessee not claiming these deductions in its return of income. The Tribunal found that the issue was covered in favor of the assessee by its own case for AY 2010-11, where it was held that the assessee is entitled to weighted deductions under Section 35(2AB) for R&D expenditure.

The Tribunal directed the assessee to withdraw the alternative claim under Section 35(1)(i), as the primary claim under Section 35(2AB) was allowed.

Conclusion:

The Tribunal allowed the appeals filed by the assessee for AY 2011-12 and AY 2012-13, directing the A.O to allow the weighted deductions claimed under Section 35(2AB) of the Income-tax Act, 1961. The appeal filed by the revenue for AY 2011-12 was dismissed. The Tribunal's decision was based on the recognition of the R&D facilities by DSIR and the legal precedents that supported the assessee's claim for weighted deductions.

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