TaxTMI 
TaxTMI 
2026 (8) TMI 181
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....s of appeal: 1.1 Weighted deduction u/s. 35(2AB) of the Act (Act): On the facts and circumstances of the case and in law, the Ld. CIT(A), has erred in upholding disallowance of weighted deduction of Rs. 80,41,254/- u/s. 35(2AB) of the Act being one and one - half times of the expenditure incurred on scientific research on in-house research and development facility. 1.2 Deduction u/s. 35(1)(i) of the Act. Without prejudice, on the facts and circumstances of the case and in law, the ld.CIT(A), has erred in denying deduction of Rs. 53,60,836/- u/s. 35(1)(i) of the Act being revenue expenditure incurred on scientific research related to the business of the appellant. Ground Number 1: Weighted deduction u/s. 35(2AB)....
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....orm No. 3CL, the assessee had made a representation before the DSIR pointing out discrepancies in the quantification of eligible expenditure and had specifically sought reasons for the difference of Rs. 53.61 lakhs between the expenditure claimed by the assessee and the expenditure certified in Form No. 3CL. It was submitted that the representation before the DSIR is still pending and that the DSIR, being the prescribed authority under section 35(2AB) of the Act, is the final authority for certifying the eligible expenditure. The learned Counsel, therefore, prayed that liberty may be granted to the assessee and suitable directions may be issued to the Assessing Officer to grant consequential relief if, pursuant to the assessee's represe....
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....irections, this ground of appeal is treated as allowed for statistical purposes. Ground Number 1.2 Deduction u/s. 35(1)(i) of the Act: 7. Ground No. 1.2 has been raised by the assessee without prejudice to Ground No. 1. The alternate contention of the assessee is that even if the expenditure excluded by the Department of Scientific and Industrial Research (DSIR) while issuing Form No. 3CL is held to be ineligible for weighted deduction under section 35(2AB) of the Act, such expenditure cannot be denied deduction altogether. It is the case of the assessee that the expenditure is revenue expenditure incurred on scientific research related to its business and, therefore, the same is independently allowable under section 35(1)(i) of the A....
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....s cannot be sustained. Section 35(2AB) and section 35(1)(i) operate in different fields and prescribe distinct conditions for allowability of deduction. Section 35(2AB) grants weighted deduction in respect of expenditure incurred on an approved in-house research and development facility, whereas section 35(1)(i) allows deduction in respect of revenue expenditure laid out on scientific research related to the business carried on by the assessee. Therefore, merely because a part of the expenditure has not been approved by the DSIR for the limited purpose of weighted deduction under section 35(2AB) of the Act, it does not automatically follow that such expenditure is disentitled to deduction under section 35(1)(i) of the Act, provided the stat....
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....proved in-house research and development facilities. On the other hand, section 35(1)(i) of the Act grants deduction in respect of revenue expenditure laid out on scientific research related to the business carried on by the assessee and section 35(1)(iv) read with section 35(2) deals with capital expenditure incurred on scientific research related to the business. The conditions governing these provisions are not identical. Therefore, merely because expenditure aggregating to Rs. 1,03,51,882/- was not approved by DSIR for the purpose of weighted deduction under section 35(2AB) of the Act, it does not automatically follow that the said expenditure is disentitled to deduction under sections 35(1)(i) and 35(1)(iv) read with section 35(2) of t....