Assessee entitled to full weighted deduction under Section 35(2AB) for entire financial year once DSIR approval received

The ITAT Delhi held that an assessee is entitled to weighted deduction under Section 35(2AB) for the entire financial year once the R&D facility receives DSIR approval, regardless of the specific approval date within that year. The AO had partially disallowed the deduction for the period from 1.4.2012 to 19.11.2012, as DSIR approval was granted from 20.11.2012 onwards. Following the precedent in Sandan Vikas (India) Ltd., the Tribunal ruled that the provisions do not suggest approval date as a cut-off for eligibility. The assessee's appeal was allowed, granting full deduction for expenditure incurred from 1.4.2012 to 31.3.2013.

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Issues involved:
The judgment involves the disallowance of an amount claimed as a deduction under section 35(2AB) of the Income Tax Act, 1961.

Issue 1: Additional Ground Not Admitted
The appellant raised an additional ground in the appeal, but later decided not to press it. The Tribunal dismissed the additional ground as not admitted due to lack of arguments in its support.

Issue 2: Disallowance of Deduction under Section 35(2AB)
The main issue in the appeal was whether the disallowance of an amount claimed as a deduction under section 35(2AB) of the Act was justified. The appellant, engaged in manufacturing auto parts, had applied for recognition of in-house research and development (R&D) facility, which was approved by the Department of Scientific and Industrial Research (DSIR). The appellant claimed a deduction for the total expenditure incurred on R&D, but the assessing officer restricted the deduction. The Tribunal examined the expenditure incurred on capital and revenue accounts and the approval granted by DSIR.

Decision and Reasoning
The Tribunal found that once a R&D facility is approved by DSIR, the expenditure incurred on it is eligible for weighted deduction under section 35(2AB) for the whole year. Citing precedents and judicial decisions, including the Gujarat High Court and other High Courts, the Tribunal held that the appellant was entitled to claim the deduction for the expenditure incurred during the relevant period. The Tribunal allowed the appellant's appeal on merits, granting the deduction for the expenditure from 1.4.2012 to 31.3.2013. As a result, the other grounds challenging the validity of reassessment were not addressed. The appeal was partly allowed in favor of the appellant.

This summary provides a detailed breakdown of the issues involved in the legal judgment and the Tribunal's decision on each issue.

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