TaxTMI 
TaxTMI 
TaxTMI 
2022 (8) TMI 1287
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.... of the Income Tax Act, 1961 ('the Act'). 2. That the CIT(A) erred on facts and in law in holding that Department of Scientific and Industrial Research ('DSIR') is the competent authority to approve expenses for the purposes of claiming weighted deduction under section 35(2AB) of the Act 3. That the CIT(A) erred on facts and in law in not appreciating that there is no provision under the Act empowering DSIR to approve the quantum of expenditure for the purposes of claiming deduction under section 35(2AB) of the Act. 4. That the CIT(A) erred on facts and in law in not appreciating that the only requirement for claiming deduction under section 35(2AB) is that the in-house Research and Development facility is to be approved by DSIR and not for approval of expenses." 3. In this case, the Assessing Officer restricted the assessee's claim of weighted deduction u/s 35(2AB) of the Act to the amount of Rs.14.03 Crores certified by DSIR and rejected the other amount of Rs.52,69,000/- as against the claim of the assessee for an amount of Rs.14.55 Crores. 4. Upon assessee's appeal Ld. CIT(A) confirmed the same by concluding as under:- "5.10 In the case of Electronic Corporation India....
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....case unapproved revenue expenditure of Rs. 1,31,87,576/-, if not allowable u/s 35(2AB) of the Act, in the absence of approval from DSIR certainly can be allowed as deduction u/s 35(l)(i) and 37(1) of the Act. 5.12 Considering the above facts, appellant is eligible for weighted deduction u/s 35(2AB) on the amount certified by DSIR as revenue expenditure. DSIR is the competent authority which has confirmed the cost incurred by the appellant during the year under consideration after examining the detail of the expenses furnished by the appellant. No rectification was done by DSIR till date, it infers that there is no mistake on the part of DSIR on account of approving revenue expenses in Form 3CL. Hence, difference of Rs. 52.69 lacs (Rs.14.55 Crore - Rs. 14.03 Crore) is not allowable to appellant for weighted deduction u/s 35(2AB) and AO is justified in disallowing the excess claim. The addition made by the Assessing Officer is hereby confirmed." 5. Against the above order, the assessee is in appeal before us. 6. We have heard both the parties and perused the records. Ld. Sr. Counsel for the assessee submitted that issues covered in favour of the assessee via series of Hon'ble Hig....
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....) as under:- "6. The Tribunal has discussed this issue at length in its order. It was contended by the assessee before the Tribunal that nowhere the provisions provide that expenditure from the date of approval only has to be allowed. In the absence of those words, such conditions cannot be imputed in the statute by the lower authorities. Doing so amounts to reading more in the law which is not expressly provided. The words used are any expenditure incurred by the assessee on scientific research on the in-house "R & D" facility approved by the prescribed authorities has to be allowed by deduction of expenditure so incurred. Meaning of these words is plain and clear that the facility is to be established first and on approval of the facility all the expenditure so incurred by the assessee for development of in-house facility is to be held as eligible for weighted deduction. Form No. 3CM, which is order of approval as provided by the rules in this behalf also does not have any mention of date of approval rather it speaks of only approval. The lower authorities are reading more than what is provided by law. A plain and simple reading of the Act provides that on approval of the "R & ....
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....s year relevant to the assessment year in question, we are of the view that the assessee is entitled to claim weighted deduction in respect of the entire expenditure incurred under section 35(2AB) of the Act by the assessee. 9. We are, therefore, of the view that no substantial question of law arises out of the order of the Tribunal." 8. Hon'ble Delhi High Court in the case of CIT vs Sandan Vikas India Ltd.(Supra) held as under:- 1. The assessee claims that it is engaged in the business of manufacturing of automotive air conditioning and is also undertaking research and development activity in this behalf. In the assessment year, i.e., assessment year 2005-2006, the assessee claimed a deduction of Rs.3,83,62,003/- under Section 35 (2AB) of the Income Tax Act (hereinafter referred to as "the Act"). The business expenses incurred are naturally allowed as deductions, however, the aforesaid provisions gives weighted deduction to the assessees, who are engaged into research and development activity. The objective is to encourage research and development by the business enterprises in India. 2. The provision further states that in order to claim this weighted deduction, it is to b....
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....that section speaks of: (i) Development of facility; (ii) Incurring of expenditure by the assessee for development of such facility; (iii) approval of the facility by the prescribed authority, which is DSIR; and (iv) allowance of weighted deduction on the expenditure so incurred by the assessee. 9. The provisions nowhere suggest or imply that research and development facility is to be approved from a particular date and, in other words, it is nowhere suggested that date of approval only will be cut-off date for eligibility of weighted deduction on the expenses incurred from that date onwards. A plain reading clearly manifests that the assessee has to develop facility, which presupposes incurring expenditure in this behalf, application to the prescribed authority, who after following proper procedure will approve the facility or otherwise and the assessee will be entitled to weighted deduction of any and all expenditure so incurred. The Tribunal has, therefore, come to the conclusion that on plain reading of section itself, the assessee is entitled to weighted deduction on expenditure so incurred by the assessee for development of facility. The Tribunal has also considered....