TaxTMI 
TaxTMI 
2021 (3) TMI 416
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.... "7. Grounds 6 to 10 raised by assessee are with regard to rejection of the claim of assessee for grant of weighted deduction u/s. 35(2AB) of the Act. The admitted position u/s. 35(2AB) of the Act is that approval of prescribed authority on the scientific research on in house R&D facility is required to be obtained. It is also the admitted position that the assessee obtained the approval from the prescribed authority w.e.f. 1.4.2011. The assessee had made application to the prescribed authority for grant of approval on 12.5.2011 and the date of approval of the scientific research by the prescribed authority was 7.12.2011. It was the case of AO that since in the previous year relevant to AY 2010-11, the assessee had not even made application for grant of approval to the prescribed authority and since the approval of the prescribed authority is only w.e.f. 1.4.2011, the deduction cannot be allowed for AY 2010-11. The assessee, however, had placed reliance on the decision of Hon'ble Gujarat High Court in the case of Claris Lifesciences Ltd. [326 ITR 251 (Guj)] wherein the Hon'ble High Court held that the provisions of section 35(2AB) nowhere suggests or implies that the R&D facility ....
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....s claimed by the assessee in AY 2001-02 and the approval was received in that year itself. Similarly in the case of Sandan Vikas (India) Pvt. Ltd. (supra), weighted deduction was claimed in AY 2005-06 and the application was filed by the assessee company on 10.1.2005 i.e., during the relevant previous year. In the case of Banco Products (I) Ltd. (supra), weighted deduction was claimed for AY 2008-09 and application to the prescribed authority was made on 22.12.2006, much prior to the previous year relevant to AY 2008- 09. It was in those circumstances that that the High Court took the view that the date of recognition or date of approval is irrelevant, but the existence of recognition or approval is sufficient to grant deduction u/s. 35(2AB). In our view, the ratio laid down in the aforesaid decision cannot be applied to the case of assessee. As we have already mentioned that the approval for grant of recognition to the prescribed authority was made by the assessee only on 12.5.2011 and not at any time during the relevant previous year. In the given facts and circumstances, we are of the view that the order of CIT(Appeals) should be upheld on this basis. We may also mention a simil....
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....on for approval was made on 12.05.2011 which is after the end of previous year relevant assessment year 2011-12. The revenue prayed that deduction u/s.35(2AB) of the Act for AY 2011-12 also ought not to have been granted by the Tribunal. 5. By an order dated 5.11.2020, the Tribunal decided MP 119/Bang/20 filed by the revenue by holding as follows: "We have carefully considered the rival submissions and are of the view that date of approval is very crucial and in view of the facts brought to our notice in the MP and in view of the facts brought to our notice by the ld. counsel for the assessee regarding the correct date of approval of the prescribed authority which is stated to be 19.01.2011, the question with regard to the allowability of the assessee to claim deduction u/s 35(2AB) for AY 2011-12 needs to be readjudicated as there is a mistake apparent on the face of the record in terms of noticing the correct date of approval of the prescribed authority u/s 35(2AB). Accordingly we recall the order of the Tribunal in ITA No. 1352/B/15 dated 06.02.2020 for the limited purpose of re-adjudicating the grounds 2 to 6 raised by the assessee in that appeal which is with regard....
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....judgment of this Court in case of Claris Life sciences Ltd. (supra) and judgment of Delhi High Court in case of Maruti Suzuki India Ltd. (supra), would show that period during which the approval is granted is not relevant as long as such approval has been granted and expenditure has been incurred for the specified purpose. As noted, the provision is aimed at promoting development of in house research and development facility which necessarily would require substantial expenditure which immediately may not yield desired results or could be correlated to generation of additional revenue. By the very nature of things, research and development is a hit and miss exercise. Much of the efforts, capital as well as human investment may go waste if the research is not successful. The legislature therefore, having granted special deduction for such expenditure, the same should be seen in light of the purpose for which it has been recognised. Research and development facility can be set up only after incurring substantial expenditure. The application for approval of such facility can be made only after setting up of the facility. Once an application is filed by the assessee to the prescribed a....
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....ry, DSIR, Ministry of Science and Technology, Govt. of India, who has approved the facility by his recognition dated 19.1.2011. 10. The Hon'ble Gujarat High Court in the case of CIT Vs. Claris Lifesciences Ltd., (supra) has considered an identical issue in light of provisions of Sec. 35(2AB) of the Act, and held that the provisions nowhere suggest simply that R& D facility is approved from particular date and in other words, it is no where suggested that date of approval only will be cut off date for eligibility. The court further held that once facility is approved, the entire expenditure so incurred on development of R&D facility has to be allowed for weighted denudation. The Hon'ble Delhi High Court in the case of Maruthi Suzuki India Pvt Ldt., Vs Union of India (2017) 397 ITR 728 (Delhi), had considered an identical issue and held that for availing the benefit u/s 35(2AB) of the Act, what is relevant is not the date of recognition or the cut off date mentioned in the certificate of the DSIR or even the date of approval, but the existence of recognition. The Hon'bel Gujarat High Court in the case of Banco Product India Ltd., Vs. DCIT (supra) had once again reiterated its earl....