INCOME TAX ACT, 1961

Section 35(2AB)

Business deduction under section 35(2AB) - Scientific research expenses - AO denied weighted deduction for want of Form No. 3CL -

Assessee engaged in manufacture and sale of animal feed, supplements and veterinary drugs claimed deduction under section 35(2AB) in respect of scientific research expenses incurred by it @ 200% of expenses in terms of the above said section. AO noticed that assessee had not furnished From No. 3CL issued by DSIR, New Delhi. Accordingly, AO restricted claim of revenue expenditure to 100% and disallowed capital expenditure. Held: Prior to 1-7-2016 Form 3CL had no legal sanctity and it is only with effect from 1-7-2016 with amendment to rule 6(7A)(b) that quantification of weighted deduction under section 35(2AB) has significance. In the instant case year under consideration being assessment year 2014-15, the same would fall prior to 1-4-2016 and hence AO was not justified for insisting on production of Form No. 3CL and as there was no difficulty about quantum of deduction under section 35(2AB), because AO allowed 100% of expenditure as deduction under section 35(2AB)(1)(i). Deduction under section 35(2AB) was to be allowed as weighted deuction at 200% of the expenditure and ought not to have been restricted to 100% of expenditure incurred on scientific research.

Followed:Mahindra Electric Mobility Ltd. v. Asstt. CIT [ITA No. 641/Bang/2017, dated 14-9-2018] : 2019 TaxPub(DT) 342 (Bang-Trib).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14 & 2014-15

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