TaxTMI 
TaxTMI 
2020 (10) TMI 942
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....allowing deduction under Section 80IB-8A of the Income Tax Act and the Assessing Officer is well within his jurisdiction to accept or reject the same based on the conformity adhered to by the assessee? 2. In order to appreciate the factual context, in which the aforesaid substantial question of law arises for our consideration in this appeal, reference to a few facts is necessary. The assessee is a company, which is engaged in the pharmaceutical research and development as well as clinical research for pharmacy products. The assessee filed the return of income for the Assessment Year 2008-09 and claimed deduction of Rs. 31,32,49,090/- under Section 80-IB(8A) of the Act. The Assessing Officer vide order dated 15.10.2012, inter alia by taking into account the Work Orders dated 31.08.2006 and 13.11.2007 inter alia held that assessee is not undertaking any scientific research and development on its own as specified under Rule 18DA(1)(c) of the Rules. It was further held that assessee has not been able to sell any output / prototype till date and undertakes the activities as specified in the agreement and transfer the data / information to the customer who in turn may use the same to d....
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....ndition contained in Rule 18DA(2) of the Rules is not complied with. It is also pointed out with reference to the agreement entered into by the assessee that the assessee's responsibilities under the agreement were to deal with regulatory authorities, preparation of protocol, study materials and identification of laboratory / investigation sites etc. and aforesaid services cannot be equated with undertaking scientific research and development of its own in terms of Rule 18DA(1)(c) of the Rules. Our attention has also been invited to Clause 17 of the Agreement and it is pointed out that the provisions of the agreement clearly indicate that the assessee was not undertaking any scientific research and development of its own as specified in Rule 18DA(1)(c) and Sub-Rule (2) of Rule 18D of the Rules. Reference has also been made to Section 43(4) of the Act, and it has been contended that scientific research connotes any activity for extension of knowledge in the fields of natural or applied sciences and the assessee is not contributing to expansion of such knowledge through its activities and earnings of the assessee are more in the nature of job charges and therefore, assessee is no....
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....) to (iii) are complied with and the dispute is only with regard to compliance with conditions mentioned in Clause (iv). Reference has also been made to Rule 18D and Rule 18DA of the Rules, which deals with prescribed authority for approval of companies carrying on scientific research and development and prescribed conditions for deduction under Sub-Section (8)(a) of Section 80-IB of the Act respectively. It is also submitted that the claim under Section 80 -IB(8A) of the Act is allowed upto 2007-08 which is evident from para 24 of the order passed by the Tribunal. It is also pointed out that renewal has been granted to the assessee in the year 2006, 2009 and 2012 as well. Reference has also been made to findings recorded by the Tribunal and it is pointed out that admittedly, the assessee has been granted approval, which has been renewed from time to time. It is also pointed out that no substantial question of law has been framed with regard to findings recorded by the Tribunal in paragraphs 27, 28 and 30 of the order and the substantial question of law has been framed only with regard to finding recorded by the Tribunal in paragraph 81 of the judgment. It is also urged that clinic....
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....ars subject to the condition that the company satisfied the conditions enumerated in sub-Section (8A) of Section 80-IB of the Act. Rule 18D Rule 18D (1) For the purposes of sub- section (8A) of section 80-IB, the prescribed authority shall be the Secretary, Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. (2) The prescribed authority shall initially grant approval to a company carrying on scientific research and development for a period of three assessment years and subject to satisfactory performance of that company on periodic review extend the said approval for a further period of three assessment years so that the total period of approval is for ten consecutive assessment years, beginning from the initial assessment year. Sub-Rule (1) of Rule 18D specifies the prescribed authority, whereas, sub-Rule (2) of Rule 18D provides that prescribed authority shall initially grant approval to a company for a period of 3 Assessment Years and subject to satisfaction of the satisfactory performance of the company, on period review, extend the approval for a period of three Assessment Years so that total period of approval is....
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....all be accompanied by-- (a) memorandum of association and articles of association incorporating all amendments duly certified by the company secretary or managing director of the company; (b) annual report of the company for the last three years, if available; (c) photocopies of the memorandum of understanding relating to all on-going and future sponsored research projects or programmes. (6) The prescribed authority may call for any information or document which may be necessary for consideration of the grant of approval under sub-rule (2) of rule 18D. (7) The prescribed authority shall grant approval within four months from the date of receipt of the application : Provided that where the approval is not granted, the decision of the said authority shall be communicated to the applicant within the said period of four months : Provided further that no approval shall be refused unless the applicant has been given an opportunity of being heard. 8. From a conjoint reading of Rule 18D and Rule 18DA of the Rules, it is axiomatic that it is for the prescribed authority to examine the nature of research and scientific development proposed to be or being carried out by t....