2012 (4) TMI 743

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....ssessees as well as the revenue have filed these appeals. 3. We have heard Mr. R.R. Vora, the learned Counsel for assessee and Mr. Pavan Ved, the learned CIT (DR). 4. On a careful consideration of the facts and circumstances of the case and a perusal of the papers on record and the case law last cited, we hold as follows: 5. We first take up the assessee's appeal. The grounds read as follows: 1. Weighted deduction u/s. 35 (2AB): In the facts and circumstances of the case and in law, the learned CIT (A) erred in upholding disallowance of weighted deduction u/s. 35 (2AB) in respect of following expenses incurred on Chikalthana, Aurangabad R&D facility. Pilot Bio-study expenses Rs. 5,93,42,459/- Consultancy charges Rs. 1,44,84,354/- Analysis charges Rs. 65,000/- Total: Rs. 7,38,91,813/- 6. In this behalf:- having accepted the plea of the appellant that the expenditure incurred on clinical drug trials qualify for weighted allowance, the learned CIT (A), still erred in rejecting plea for weighted allowance in respect of above expenses on the ground that the expenses did not constitute expenses on clinical trials. In....

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....ounds read as follows: 1. On the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in holding that the deduction u/s. 80IB of the Act, should be granted without allocating R&D expenses and interest expenses to units eligible for grant of deduction. 2. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in holding that the deduction u/s. 35(2AB) is allowable in respect of Scientific Information, Scientific Literature and Clinical Trials even if the same are not incurred in-house without appreciating that all expenditures on which weighted deduction u/s. 35(2AB) can be allowed must be incurred within the four walls of the eligible units. 3. On the facts and in the circumstances of the case and in law, the Ld CIT(A) erred in directing the AO to allow the deduction of Rs. 3,60,27,049/- disallowed u/s. 40 (a)(i) of the Act, without appreciating that assessee company was required to deduct tax constituted fees for technical services under explanation 2 to Section 9(1)(vii) and by conducting bio-equivalence or clinical tests through CRO, assessee gets technical knowledge, experience and skill. 4. T....

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....st which was paid was claimed in the Head Office A/c. as the interest borrowed by the assessee were borrowed by the Head Office for running its overall business units. Therefore, allocation of some part of interest again is not justified as assessee has taken into account the interest amount on account of Head Office. Nothing has been brought on record that borrowed funds by the Head Office were transferred to the units on which the deduction u/s. 80IB has been claimed by the assessee. The onus lay upon the Assessing Officer to discharge it by bringing some positive evidence to establish that some part of the expenditure on account of R&D and on account of interest has been incurred on these units because Assessing Officer, who is alleging that some part of expenditure incurred on R&D and interest are related to the units on which deduction u/s. 80IB has been claimed. This onus has not been discharged, therefore, allocation of the proportionate expenses at the end of the Assessing Officer, in our considered view were not justified. The CIT(A) was also not justified in confirming the action of the Assessing Officer. In case of Ponds India Ltd., decided in ITA No. 2047/Mad./88 the Tr....

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....barred. Whether the debt has become bad or not is a decision which the businessman has to take keeping in mind all the relevant facts. Since the assess was not able to recover the debt till the year of account and there were no prospects of recover, the assessee was justified in writing it off as bad debt. Neither the Assessing Officer nor the CIT (A) has brought any material on record to show that there was still some hope for recovery of the amount. The bad debt is directed to be allowed". The ratio of both of these decisions of the tribunal are surely applicable on the facts of the present case. Therefore, in view of the ration of these decisions and in view of the facts and circumstances discussed by us above, we hold that the CIT (A) was not justified in confirming the action of the Assessing officer in regard to allocation of expenses on account of R&D and interest for the purpose of computing deduction u/s. 80IB. Accordingly, we set aside the order of lower authorities on this issue and the Assessing Officer is directed to re-compute the deduction accordingly". Respectfully following the same we uphold the order of the 10 CIT (A) on the issue and dismissed this g....