Scientific research deduction applies on payment to approved institution without requiring current year taxable income

Section 35(1)(ii) allows a statutory deduction for sums paid to an approved scientific research association or institution, and the only threshold condition is that the payment be made to the recognised entity. No additional requirement can be imported that the payment must come from current year taxable income or earnings chargeable to tax. The provision is to be applied liberally to further the legislative object of promoting scientific research. A reference to section 80GGA does not negate the claim where the taxpayer has professional income and otherwise satisfies the higher benefit available under section 35(1)(ii).

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Issues: Whether the assessee was entitled to deduction under section 35(1)(ii) of the Income-tax Act, 1961 for a payment made to an approved scientific research foundation out of earlier savings and not out of the current year's taxable income.

Analysis: The allowance under section 35(1)(ii) is a statutory deduction in the computation of business or professional income and is a bounty or concession granted by the Legislature to promote scientific research. The only threshold condition in the provision is that the assessee must pay a sum to an approved scientific research association or institution. No further requirement exists that the payment must arise only from current year income or from income chargeable to tax. Once the statutory condition of payment to an approved institution is satisfied, the provision must be applied liberally to give effect to the legislative objective. The parallel reference to section 80GGA did not defeat the claim, because the assessee had professional income and was entitled to seek the higher benefit available under section 35(1)(ii).

Conclusion: The assessee was entitled to deduction under section 35(1)(ii); the disallowance by the lower authorities was unsustainable.

Ratio Decidendi: Where a deduction provision for approved scientific research requires only payment to a recognised institution, no additional condition that the payment must come from current taxable income can be imported into the statute.

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