INCOME TAX ACT, 1961

Section 80-IB(8A)

Deduction under section 80-IB - Allowability - AO proceeded to examine fulfilment of conditions prescribed under rule 18DA(1) -

Assessee claimed deduction under section 80-IB(8A). AO denied deduction holding that assessee was not undertaking any scientific research and development on its own as specified under rule 18DA(1)(c). Further, assessee had not been able to sell any output/prototype till date and undertook activiteis as specified in the agreement and transfer data/information to customer who in turn could use the same to develop a technology product/patent and assessee itself was not engaged in Scientific, Research and Development activities leading to development/improvement/transfer of technology and thus, assessee did not meet prescribed conditions under section 80-IB(8A).Held: From a conjoint reading of rule 18D and rule 18DA, it is axiomatic that it is for prescribed authority to examine nature of research and scientific development of approval. Once prescribed authority grants approval and such approval holds the field, it would not be open for AO or any other revenue authority to sit in appeal over such approval certificate and re-examine the issue of fulfilment of conditions mentioned in sub-rule (1) of rule 18DA, in order to disallow deduction under sub-section (8A) of section 80-IB. Accordingly, AO was not justified in disallowing deduction.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2008-09

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