TaxTMI 
TaxTMI 
2003 (7) TMI 65
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....ed sections. The assessee constructed a building for the purpose of scientific research and, therefore, claimed deduction under the provisions of section 35(1)(iv) read with section 35(2) of the Act for the assessment years 1981-82 and 1982-83. It is not in dispute that construction of the building was completed on October 25, 1981, as per the certificate given by the concerned architect. The assessee claimed the deduction under the provisions of section 35 of the Act but as construction of the building was not over and as the building was not put to use in the said assessment years, the Income-tax Officer did not allow the deduction claimed by the assessee. Being aggrieved by the disallowance, the assessee filed an appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax allowed the appeal holding that it was not necessary for the assessee to put the said building to use so as to avail of the deduction under the provisions of section 35 of the Act. Being aggrieved by the order passed by the Commissioner of Income-tax (Appeals), the Revenue filed an appeal before the Tribunal. The Tribunal agreed with the view expressed by the Commissioner of ....
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....hat they initiate research and development activities which are ultimately beneficial to the society. According to him, if the building which has been constructed by the assessee is in fact not used for the purpose of research and development, the purpose with which the said section is enacted would be frustrated. He has submitted that so as to avail the deduction under the provisions of section 35 of the Act, the assessee must establish the following two facts: (i) the asset must be acquired during the relevant previous year; and (ii) the asset must be used for research and development purpose. He has fairly submitted that section 35 of the Act nowhere makes it obligatory on the part of the assessee to use the asset for the purpose of scientific research to avail of the deduction. However, he has submitted that looking to the object with which the section has been enacted, one has to interpret the section in such a way that if the asset is not put to use for research and development, the assessee does not get the benefit of deduction under the provisions of section 35 of the Act. It has been further submitted by learned standing counsel that both the appellate authorit....
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....ork-in-progress, machinery and equipment in transit and under erection at the assessee's research and development division would be eligible for deduction under section 35 of the Act. He has submitted that the Karnataka High Court, while delivering the said judgment, had relied upon the ratio of the judgment delivered by the same High Court in the case of Ravi Machine Tools (P) Ltd. v. CIT [1978] 114 ITR 459. It has been fairly submitted by him that the said judgment pertains to an interpretation of the provisions of section 80J of the Act. However, his endeavour is to show that when the words "actual use" are not used in the section, the Revenue cannot read those words in the section so as to deprive the assessee of the advantage which the Legislature wants to give to the assessee. According to him, benefit under section 80J was directed to be given to the concerned assessee in the judgment delivered in the case of Ravi Machine Tools (P) Ltd. v. CIT [1978] 114 ITR 459 (Karn), though the capital which was employed by the assessee had not been actually used during the relevant previous year. Using the said analogy in the instant case, it has been submitted by the learned advocate th....
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.... enacted by the Legislature and the circular referred to hereinabove while allowing deduction to the assessee under the provisions of section 35 of the Act. We are of the view that when the Legislature has not expected the assessee to put the asset to actual use, it would not be open to the Revenue to deprive the assessee of the benefit of deduction under the provisions of section 35 of the Act if the asset is not used in the previous year in which the capital expenditure is incurred. It is also relevant to note that the deduction is given not on the count of user. Had it been so, the assessee would have been given benefit in the nature of depreciation. It cannot be disputed that depreciation is allowed when the asset is used by the assessee and when he suffers loss on account of wear and tear of the asset. Had the intention of the Legislature been to grant additional depreciation, we would have agreed with the submissions made by standing counsel appearing for the Revenue but the position is different in the instant case. Here, the Legislature wants the assessee to spend more amount for scientific research and it also wants the assessee to get the benefit immediately in the ....