INCOME TAX ACT, 1961

Section 35(2AB)

Business deduction under section 35(2AB) - Research and development expenditure - Denial of deduction on the ground that necessary approval form 3CM was not available for the concerned assessment year -

Assessee claimed weighted deduction for R&D expenditure under section 35(2AB), in respect of amount incurred for R&D in its in house facility. AO denied deduction claimed on the ground that, although, the R&D facilities were recognized by DSIR, but for the purpose of tax exemption it had to be approved by the competent authority i.e. Secretary, Department of Scientific and Industrial Research, Ministry of Science and Technology, Govt. of India. Since, R&D facility had not been approved from competent authority and necessary approval form 3CM was not available for the concerned assessment year, he held that weighted deduction claimed under section 35(2AB) was not available. Held: For availing of benefit under section 35(2AB), what is relevant is not the date of recognition or the cut off date mentioned in certificate of DSIR or even the date of approval, but existence of recognition. once application is filed by assessee to the prescribed authority, assessee would have no control over when such application is processed and decided. Accordingly, AO erred in denying benefit of weighted deductions claimed under section 35(2AB) in respect of expenditure incurred for research and development activities in in-house R&D centers, even though R&D facility had been duly recognized by the competent authority.

REFERRED :

FAVOUR : in assessee's favour

A.Y. :

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