Clause 39 - Deduction for scientific research and development allowance - Direct Taxes Code Bill, 2009

Deduction for scientific research and development allowance 39. (1) A company shall be allowed a deduction equal to one hundred and fifty per cent. of the expenditure incurred on,- (a) creating and maintaining an in-house facility for scientific research and development; and (b) carrying out scientific research and development in the in-house facility. (2) The deduction under sub-section (1) shall be allowed if,- (a) the company creates and maintains an in-house facility for carrying out scientific research and development; (b) the research facility is approved by the Central Government on the basis of recommendation of the prescribed authority; (c) the company enters into an agreement with the prescribed authority for cooperation in the research and development facility and for audit of the accounts maintained for that facility. (3) The approval granted by the prescribed authority to a predecessor shall be deemed to have been granted to the successor if the approval is transferred to the successor as a result of a business reorganisation. (4) The deduction under this section shall not be allowed to a company in respect of the expenditure referred to in sub-section (1), if the expenditure is incurred in the course of its business which is in the nature of scientific research and development. (5) The provisions of sections 32 to 38 shall, as far as may be, apply to the expenditure in respect of which deduction is not allowed under sub-section (4). (6) The Board may prescribe by rules the procedure for grant of approval by the prescribed authority.