Scientific research deduction under Section 35(2AB): Form 3CLA procedural lapse cured by subsequent filing, deduction allowed

Entitlement to weighted deduction for scientific research turned on procedural compliance with Form 3CLA; the assessee had incurred in-house R&D expenditure which the Assessing Officer did not dispute, but initial filing complied with older guidelines and a fresh Form 3CLA was later submitted to cure the procedural defect. The appellate authority directed the Assessing Officer to take the Form 3CLA on record and, after examination, allow the weighted deduction under the law. The appellate tribunal affirmed that direction and dismissed the appeal as lacking merit.

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Issues: Whether the assessee is entitled to the weighted deduction under Section 35(2AB) of the Income-tax Act, 1961 in respect of in-house R&D expenditure despite having filed the audit report in Form 3CLA under an outdated format and having furnished the electronically required Form 3CLA/Form 3CL belatedly, in alleged violation of Rule 6(7A) of the Income-tax Rules, 1962.

Analysis: The assessee obtained approval for its in-house R&D facility from the prescribed authority (DSIR) and incurred the R&D expenditure which was not disputed on merits by the Assessing Officer. The assessee initially furnished the audit report in the pre-amendment format and subsequently filed the electronically required audit report and obtained Form 3CL from DSIR. The claimed non-compliance under Rule 6(7A) was due to an inadvertent oversight in adopting the amended e-filing format; the factual certifying document (Form 3CL) was ultimately issued by the prescribed authority. The learned appellate authority directed the Assessing Officer to take Form 3CL on record and, after examination, allow the deduction; that direction was based on the undisputed nature of the expenditure, the DSIR approval, and the bona fide mistake in procedural compliance.

Conclusion: The assessee is entitled to the weighted deduction under Section 35(2AB) of the Income-tax Act, 1961; the Assessing Officer is directed to take Form 3CL on record and, after examining the same, allow the deduction.

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