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TMI Blog2011 (2) TMI 1287X X X X Extracts X X X X X X X X Extracts X X X X ..... earch. 3. Rival contentions have been heard and records perused. 4. Facts in brief are that the assessee is engaged in manufacturing of Pacemaker and trading of stent. During the year under consideration, it incurred expenditure of Rs. 19,42,936 on building and plant and machinery for Research and Development purposes. It claimed 100 per cent deduction of such expenditure under section 35(2). The Assessing Officer declined the same by observing that as per provisions of section 35(2B) in the case of Company, which is engaged in the business specified in section 35(2AB)( i ), the assessee has to follow certain procedure, then only assessee will be entitled for getting deduction of 150 per cent of expenditure on R D. The Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anation. Where any such expenditure has been laid out or expended before the commencement of the business (not being expenditure laid out or expended before the 1st day of April, 1973) on payment of any salary [as defined in Explanation 2 below sub-section (5) of section 40A] to an employee engaged in such scientific research or on the purchase of materials used in such scientific research, the aggregate of the expenditure so laid out or expended within the three years immediately preceding the commencement of the business shall, to the extent it is certified by the prescribed authority to have been laid out or expended on such scientific research, be deemed to have been laid out or expended in the previous year in which the business is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to such conditions as may be prescribed; and ( B )such university, college or other institution is specified as such, by notification in the Official Gazette, by the Central Government. Explanation. The deduction, to which the assessee is entitled in respect of any sum paid to a scientific research association, university, college or other institution to which clause ( ii ) or clause ( iii ) applies, shall not be denied merely on the ground that, subsequent to the payment of such sum by the assessee, the approval granted to the association, university, college or other institution referred to in clause ( ii ) or clause ( iii ) has been withdrawn; ( iv )in respect of any expenditure of a capital nature on scientific research re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also that where an application under the first proviso is made on or after the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President, every notification under clause ( ii ) or clause ( iii ) shall be issued or an order rejecting the application shall be passed within the period of twelve months from the end of the month in which such application was received by the Central Government." 6. Clause ( iv ) of sub-section (1) of section 35, which is applicable to assessee, reads as under :- "( iv )in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub-section (2) :" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic equipments, computers, telecommunication equipments, chemicals or any other article or thing notified by the Board incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in-house research and development facility as approved by the prescribed authority then, there shall be allowed a deduction of a sum equal to one and one-half times of the expenditure so incurred. Explanation. For the purposes of this clause, "expenditure on scientific research", in relation to drugs and pharmaceuticals, shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority under any Central, State or Provincial Act and filing an application for a pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 35(1)( iv ), there is no such restriction for allowing deduction in respect of expenditure incurred on building. In the instant case, the assessee has incurred expenditure on building, plant and machinery and deduction equal to 100 per cent of such expenditure was claimed under section 35(1)( iv ). There is no justification for denial of claim by referring to the provisions of section 35(2AB), under which assessee has not put any claim of higher deduction at the rate of 150 per cent of its investment/expenditure. 11. It is pertinent to mention here that in terms of clause ( iv ) of sub-section (2), however, the assessee is not entitled for any further claim of depreciation under section 32 on such investment. 12. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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