Single-deduction rule for scientific research assets upheld; retrospective clarification on depreciation and research write-off was valid.

Capital expenditure on scientific research could not be deducted twice: once under the scientific research provisions and again by way of depreciation on the same asset. The statutory scheme in the 1922 Act and its successors in the 1961 Act was treated as embodying a single-deduction principle, and Explanation 1 to section 43(1) required the scientific research write-off to be reduced in computing actual cost for depreciation. The retrospective insertion of the words "or any other" in section 35(2)(iv) was treated as clarificatory, so the constitutional challenge under Articles 14 and 19(1)(g) failed.

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Issues: Whether capital expenditure on scientific research could, under the unamended scheme and after the retrospective amendment, be allowed both as a deduction under the scientific research provisions and again by way of depreciation, and whether the retrospective amendment inserting the words "or any other" in section 35(2)(iv) of the Income-tax Act, 1961 was unconstitutional.

Analysis: The statutory scheme under section 10(2)(vi) and section 10(2)(xiv) of the 1922 Act, and its successors in sections 32 and 35 of the 1961 Act, was held to embody a basic legislative principle against allowing two deductions in respect of the same capital outlay. The bar in clause (iv) of the relevant provisions was understood as preventing depreciation where the scientific research deduction had been allowed for the same asset, and Explanation 1 to section 43(1) reinforced that the cost written off under the scientific research head must be reduced while computing actual cost for depreciation. The amendment made by the Finance (No. 2) Act, 1980 was treated as clarificatory and not as creating a new burden, so the challenge based on Articles 14 and 19(1)(g) failed.

Conclusion: The assessees were not entitled to claim depreciation in addition to the scientific research deduction on the same capital expenditure, and the retrospective amendment was valid.

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