In-house R&D deduction upheld despite delayed administrative approval; records and bona fide activity suffice for entitlement.

Deduction under section 35(2AB) for in-house R&D expenditure was held allowable where DSIR approval, though delayed, ultimately covered the relevant period; procedural delay did not defeat entitlement. The tribunal emphasised that continuation of manufacturing activity after asset transfer to R&D does not negate bona fide research, that patents or publications are not prerequisite proofs, and that expenditure must be incurred for an approved in-house facility and supported by records. Absence of shown falsity, material defect, or evidence of double claim led to allowance of the declared deduction.

---

---

Issues: Whether the assessee is entitled to deduction of Rs.2,03,70,390 claimed under section 35(2AB) of the Income-tax Act, 1961 for in-house R&D expenditure for Assessment Year 2012-13.

Analysis: The assessment was earlier set aside for de novo adjudication; the assessing officer did not independently examine the revised claim but reproduced findings from the quashed order. Delay in DSIR approval is procedural and, where approval is ultimately granted covering the relevant period, does not bar entitlement to the deduction. Continuation of manufacturing activity despite transfer of assets to R&D does not, by itself, negate existence of bona fide R&D activity. The statute does not mandate patents or publications as the sole proof; what is required is that expenditure be incurred for an approved in-house R&D facility and be supported by records. No specific falsity or material defect was pointed out in the R&D expenditure details furnished. No evidence was shown of a double claim of deduction in the same assessment year on the same expenditure.

Conclusion: The claim of Rs.2,03,70,390 under section 35(2AB) is allowed in favour of the assessee.

---