INCOME TAX ACT, 1961

Section 80-IB(8A)

Deduction under section 80-IB(8A) - Allowability - AO disallowed deduction following assessment order for earlier year holding that assessee was not carrying on any research activities on its own -

Assessee company was into the business of research in hybrid seeds, duly recognised as a research company by DSIR. It had reportedly been carrying out research activities on agriculture farms owned/taken on lease at different locations in India. On the basis of its research activities for number of products, such as, cotton, corn pearl millet, hybrid rice, sunflower, pigeon pea, sorghum, okra, tomato, gourds, brinjal, chili, barja, etc., it has developed hybrid seeds. Assessee claimed deduction under section 80-IB(8A). AO following assessment order passed in assessment year 2009-10 held that income of assessee company was a result of technology it had taken from Mahyco Monsanto Biotech (I) Ltd. (hereinafter referred to as 'MMB') and it was not carrying on any research activities on its own and as such, it was not entitled for deduction under section 80-IB (8A).Held: Assessment order for assessment year 2009-10 has been overruled by CIT(A) (by reaching the conclusion that assessee company was engaged in the research activities and as such, entitled to deductions under section 80-IB(8A). For concerned assessment year 2011-12, AO again followed assessment order of assessment year 2009-10, though overruled by CIT(A), and denied deduction under section 80-IB(8A). In view of this, matter was remitted back to examine afresh if assessee-company had carried out any scientific research and development activities during the year under assessment independent of technology purchased from MMB in the light of Agreement between assessee-company and MMB and tripartite agreement between assessee company, MMB and SBGIL.

REFERRED :

FAVOUR : Matter remanded.

A.Y. : 2010-11

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