9911796707
TMI Blog2002 (2) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... previous year relevant for the assessment year 1980-81 as expenditure on scientific research?" The assessee-company derives income from sale and manufacture of tubes, print rolls, etc. The relevant assessment year is 1980-81. The brief facts in the return filed by the assessee are that the assessee claimed an expenditure of Rs.11,53,294 incurred under the head "Capital" as expenditure relatable to scientific research. This amount included a sum of Rs.11,14,885 which represented the written down value of assets, which assets were acquired earlier and used for the purpose of business but transferred to the scientific research department during the financial year relevant to the assessment year in question. The claim of the assessee was t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken by the Assessing Officer. Mr. Ranka, learned counsel for the assessee, submits that when the entry was passed on March 31, 1979, debiting the research and development account by an amount of Rs.11,53,294, there is a transfer and that amounts to expenditure on scientific research and the transfer entry of written down value must be treated as cost of the assets within the meaning of Explanation 1 to section 43, sub-section (1) of the Act. Mr. Ranka places reliance on the decision of the Madras High Court in the case of CIT v. Sundaram Fasteners Ltd. [1997] 223 ITR 455. He further places reliance on the decision in the case of CIT v. J.K. Hosiery Factory [1986] 159 ITR 85 (SC) and submitted that in that case, unabsorbed depreciation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not in dispute that the assets in question were not purchased by the assessee in the year under consideration. They were purchased in the earlier year and used for business in the year under consideration. The assessee has made only an entry in the books of account on March 31, 1979, debiting the written down value of those assets from the business assets account and crediting the written down value of the assets in the scientific research side. That entry has been reversed on June 30, 1980. Mr. Ranka submits that the Assessing Officer has stated that June 30, 1980, was the last day of the accounting year but the last day of the accounting year was March 31, 1980. Section 35 of the Act provides that if the assessee has incurred any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where an asset is used in the business after it ceases to be used for scientific research related to that business, and a deduction has to be made under clause (ii) of sub-section (1) of section 32, in respect of that asset, the actual cost of the asset to the assessee shall be the actual cost to the assessee as reduced by the amount of any deduction allowed under clause (iv) of sub-section (1) of section 35 of the Act. It is true, the Legislature has made it clear that if the assets are initially acquired for the scientific research and thereafter if the assessee wants to make use of those assets for the business, he can claim the depreciation on the value of the assets which are reduced by the amount of any deduction allowed under claus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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