2020 (3) TMI 345

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....019 passed in ITA No.1689/Ahd/2015 for A.Y. 200809. 2 The Revenue has proposed the following questions of law as substantial questions of law for the consideration of this Court: "2(a) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in no setting aside the finding of CIT(A) on the issue of disallowance of R&D expenditure after excluding export turnover for the purpose of computing allocation of R&D expenses and also in not upholding the disallowance of weighted deduction u/s. 35(2AB) on revenue expenditure made by the A.O.? (b) Whether on the facts and in circumstances of the case, the learned ITAT has erred in law and on facts in directing the Assessing Officer to a....

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....ion of such expenditure for setting up in-house R&D facilities. The Commissioner agreed with the first contention in part and granted only pro-rata relief in terms of the proportionate exports of the assessee. With respect to the second part also, the Commissioner granted partial relief." 3 We therefore do not admit question No.2(a) in this appeal also and is, accordingly, rejected. 4 So far as question No.2(b) is concerned, the the same stands answered by this Court in Commissioner of Income-tax - I vs. Cadila Healthcare Ltd [2013] 214 taxman 672 (Gujarat). This Court has observed in paras 16, 17 and 18 as under: "16 The whole idea thus appears to be to give encouragement to scientific research. By the very nature of things,....

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....entific research in relation to drugs and pharmaceuticals made for its own peculiar requirements, the Legislature appears to have added such an explanation. 17 In the case The Deputy CIT v. Mastek Limited, in Tax Appeal No.242 of 2000 and connected matters, a Division Bench of this Court had touched on the aspect of what can be termed as scientific research. In the context, certain observations made by the Bench may be of some relevance. "25. It can thus be seen that the term scientific research in the context of the deduction allowable under section 35(1) of the Act would include wide variety of activities. It can also be appreciated that every scientific research need not necessarily result into the ultimate goal with wh....