Weighted deduction for in-house R&D requires certified expenditure in Form 3CL, not facility approval alone.

For weighted deduction under section 35(2AB), approval of the in-house R&D facility was held not to be sufficient by itself; the expenditure also had to be approved within the statutory framework and evidenced through the prescribed authority's certification in Form 3CL. The Tribunal treated Rule 6 as creating separate stages for facility approval and expenditure quantification, and held that the assessment authority could not extend the deduction to amounts not so certified. The claim for non-certified expenditure was therefore rejected.

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Issues: Whether weighted deduction under section 35(2AB) could be allowed only for the expenditure certified by the prescribed authority in Form 3CL, or whether approval of the in-house R&D facility alone was sufficient to allow the entire expenditure claimed.

Analysis: The statutory scheme of section 35(2AB) and Rule 6 of the Income-tax Rules, 1962 was read as creating two distinct but connected stages: approval of the in-house R&D facility under Rule 6(5A), and approval/quantification of the expenditure incurred on that facility under Rule 6(7A). The expression "so incurred" in section 35(2AB) was treated as linking the deduction to expenditure found to have nexus with the approved research facility. The prescribed authority's report in Form 3CL was held to be the mechanism by which eligible expenditure is communicated, and the assessment authority was not permitted to extend the weighted deduction to expenditure not so certified. The earlier Tribunal view in Electronics Corpn. of India was followed, and the contrary view that approval of the facility alone sufficed was rejected as rendering Rule 6(7A) redundant.

Conclusion: Weighted deduction was restricted to the expenditure approved and reflected by the prescribed authority, and the disallowance of the non-certified amount was sustained.

Final Conclusion: The appeal failed in full, as the assessee was not entitled to weighted deduction for expenditure not certified in Form 3CL under the applicable R&D approval framework.

Ratio Decidendi: For deduction under section 35(2AB), approval of the in-house R&D facility is not enough by itself; the expenditure eligible for weighted deduction must also be approved within the statutory scheme and evidenced through the prescribed authority's certification.

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