TaxTMI 
TaxTMI 
2010 (8) TMI 484
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.... weighted deduction of Rs. 11,21,461/- u/s.35(2AB). In regard to assessee's claim of deduction u/s.35 (2AB), the AO required the assessee to furnish all the details of R&D expenditure and calculation of weighted deduction therein and also to show how the assessee fulfilled the conditions given in Income tax Act. He also, inter alia, required the assessee to furnish the copy of order by the prescribed authority in Form 3CM, and 3CL as per I.T. Rules. The assessee vide its reply dated 15.11.2007, inter alia, submitted the approval from the Ministry of Science & Technology for in-house R&D Unit vide letter dated 3.7.1997. The AO noticed that the letter was signed by the Scientist only. The assessee had also submitted renewal of said approval dated 2.5.2002, which was also singed by a Scientist. He observed that the assessee had not submitted order in Form No.3CM by the prescribed authority and report of prescribed authority to DG (Exemption) under the prescribed form No.3CL, which was a first and foremost conditions for claiming weighted deduction u/s.35(2AB) r. w. Rule 6(1B), 6(4), 6(5A), 6(7A). He required the assessee to submit the followin....
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.... research and development unit. The assessee also pointed out that Rule 6(4), 6(5A) had been introduced w.e.f. 1.4.1998 and, therefore, applicable to the application for approval made after 1.4.1998. As regards the signature of the Scientist was concerned, the assessee pointed out that the approval/renewal was on the letter head of the Government of India, Ministry of Science & Technology, Department of Scientific & Industrial Research, New Delhi and, therefore, it was beyond the scope of the assessee company to challenge. Other details were also furnished in the said letter. The AO, however, denied the deduction u/s.35(2AB) mainly for the following reasons: i) The assessee had not made application to the prescribed authority i.e. Secretary, DSIR in the prescribed Form 3CK. ii) The assessee had accepted that it had not obtained order from the prescribed authority in Form 3CM. iii) The assessee had not obtained report submitted by the prescribed authority to DG(Exemption) in form No. 3CL. iv) The assessee company had also accepted that it had not sent any audit report to the prescribed authority before the date prescribed....
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....y till date. Therefore, the assessee was deprived of benefit of section 35(2AB) for no fault of it. He relied on various authorities, which deals with the manner in which, a statutory authority bestowed with powers has to conduct itself.... 4. Ld D.R. submitted that there is no dispute that the assessee should have been approved in terms of section 35(2AB) as prescribed by Rule 6A of the I.T. Rules. He submitted that specific procedure has been prescribed which had to be followed before the assessee could avail the benefit under section 35((2AB) of weighted deduction. He submitted that the assessee's application for grant of approval in the prescribed form was filed on 28.4.2008 and hence, much belated. Further, it is admitted position that the approval has neither been rejected nor granted and on this count, it could not be inferred that the approval has been deemed to have granted. He submitted that unless approval order in writing is there, it cannot be inferred by circumstances. He submitted that it is the pre-condition for grant of deduction u/s.35(2AB). 5. Ld Counsel submitted that the assessee has been granted ....
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....Court in the case of CIT v. Raja Benoy Kumar Sahas Roy, 32 ITR 466(SC), wherein at page 475, the Hon'ble Supreme Court has noted that observations of Viswanatha Sastri, J in CIT, Madras v K.E.Sundara Mudaliar and Others as under:- "Exemption from tax granted by a statute should be given full scope and amplitude and should not be whittled down by importing limitations not inserted by the Legislature." He further referred to the decision of the Hon'ble Bombay High Court in the case of CIT v. Minerva Maritime Corporation, 155 ITR 258 (Bom), wherein, it has been held that Rules cannot be construed in such a way as to curtail or run counter to the main provisions of the relevant sections of the Act.. He further relied on the decision of the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd v. CIT, 196 itr 188(SC), wherein at page 189, the Hon'ble Supreme court observed as under:- "AA provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; and since a provision for promoting economic growth has to be interpreted liberally, the restriction on it too has to be construed so as to advance the objectiv....
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....on dt.28.4.2008 under Right to Information Act from DSIR and noted that the application for earlier years including A.Y. under consideration had been considered in para 3. However, the approval was granted from 1.4.2007 to 31.3.2011. 6.1 In the backdrop of these facts, the issue before us is whether non-availability of the approval in the prescribed form for the relevant assessment year could disentitle the assessee of deduction u/s.35(2AB) or not. In this regard, we may first refer to section 35 which deals with expenditure on scientific research. This section entitles the assessee to get deduction in respect of expenditure on scientific research laid out or expended in relation to business. 6.2 Section35(2AB) deals with a situation where a company engaged in the business of [bio-technology] or in the business of manufacture or production or any other article or thing not specified in the list of 11th Schedule]] incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land and building) on in-house research and development facility as approved by the prescribed authority i.e. Secretary, Government of....
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....ted 28.8.2008 was of no consequence and the approval granted in Form 3CM was also applicable for A.Y. 2005-06. In this regard, it is further noticeable that while granting of approval on 28.8.2008, the prescribed authority has, inter alia, observed in para 5 as under:- 'Ref.No. and Date of the application : Ref NBil dated 16.8.2007 The above Research & Development facility is further approved for the purpose of section 35(2AB) from 1.4.2007 to 31.3.2011 subject to the conditions underlined therein." The term 'further' makes it clear that the approval was not limited to 1.4.2007 to 31.3.2011 but was in addition to periods already approved. It is further noticeable that information obtained under RTI clearly showed that the assessee's applications were processed for earlier years also but no orders have been passed with reference to earlier assessment years. At the same time, the assessee has not been given any opportunity of being heard as required under proviso to Rule 6 (5A) before rejecting the said application. Therefore, impliedly, the application for the entire period, for which it was made, has to be ....