TaxTMI 
TaxTMI 
2005 (2) TMI 57
X X X X Extracts X X X X
X X X X Extracts X X X X
.... used for carrying out research and development?" The reference relates to the assessment year 1982-83. Briefly stated the facts giving rise to the present reference are as follows: The respondent/assessee is a Government of U.P. undertaking and has been set up with the basic object of promoting and developing electronic industries in the State of U.P. In the beginning it set up a factory at Allahabad and Lucknow to manufacture black and white T.V. sets. With effect from April 1, 1987, the State Government created certain separate Corporations. The factories owned by the respondent-Corporation were transferred to the different Corporations set up by the State Government namely, Uptron, Uptron Digital Systems, Uptron Communications and In....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the Act was allowable. The Assessing Officer was further of the view that the respondent/assessee was engaged in the business of investment and sale of investment, etc., and the activities would be in the nature of holding company and manufacturing activities was being carried on by its subsidiary companies and, therefore, the claim cannot be allowed. Feeling aggrieved the respondent preferred an appeal before the Commissioner of Income-tax (Appeals), who has confirmed the disallowance of Rs. 15,83,209. Still feeling aggrieved the respondent/assessee preferred a second appeal before the Tribunal. The Tribunal after taking into consideration the material and evidence on record had allowed the claim of the respondent/assessee. The Tribuna....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e, and Sri Satish Mandhyan for the respondent/assessee. Learned standing counsel submitted that as the respondent had sold off/transferred all its factories to its subsidiary companies, it ceased to do any business and, therefore, the expenditure incurred on research and development was not admissible under section 35 of the Act. According to him for claiming allowance of expenditure on scientific research under section 35 of the Act, the sine qua non is carrying on the business as the expenditure laid out or expended on scientific research should relate to the business. As no business was being done and the income was mainly from other sources and sale of investments, the Tribunal has committed an error in upholding the claim under sectio....