2014 (2) TMI 986 - AT - Income Tax

Denial of deduction u/s 80IB(8A) of the Act - Profits derived from Medicinal Chemistry and Clinical Pharmacology Division Held that - The decision in GVK Biosciences Pvt. Ltd., Versus Addl. CIT 2014 (2) TMI 597 - ITAT HYDERABAD followed - The prescribed authority under the Act, having approved the assessee as a research and development company, assessee is eligible for deduction under S.80IB(8A) and also renewed such approval from year to year, the learned CIT(A) cannot override the approval/renewal granted by the prescribed authority and deny the benefit to the assessee - deduction u/s 80IB cannot be denied to the assessee, till such time, the assessee is approved as a Research and Development Organisation - the assessee is entitled to deduction under S.80IB of the Act Decided in favour of Assessee.

Summary

Issues:
1. Eligibility for deduction under section 80IB(8A) of the Income Tax Act for the assessment year 2008-09.

Analysis:

Issue 1:
The main issue in this case was the eligibility of the assessee for a deduction under section 80IB(8A) of the Income Tax Act for the assessment year 2008-09. The assessee, engaged in bio-informatics and Contract Research Services, claimed the deduction under section 80IB, stating its engagement in scientific research and development activities. However, the Assessing Officer rejected the deduction, noting that the assessee's activities were more in the nature of job work rather than scientific research and development. The Commissioner of Income-tax(Appeals) upheld this decision, stating that the assessee did not engage in research leading to new discoveries or technologies, but rather administered drugs to human subjects for testing purposes. The assessee appealed to the ITAT Hyderabad, arguing that they were approved as a research and development company and fulfilled all conditions for the deduction under section 80IB(8A). The ITAT considered previous decisions in the assessee's favor and ruled that the assessee was indeed entitled to the deduction under section 80IB, as per the approval granted by the prescribed authority and the absence of any change in relevant facts for the assessment year in question.

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