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TMI Blog2018 (10) TMI 580X X X X Extracts X X X X X X X X Extracts X X X X ..... hority. In the present case, a categorical finding is given by AO which remains uncontroverted that the assessee has not produced necessary approval taken from the prescribed authority namely, Secretary, Department of Scientific and Industrial Research, Govt. of India. Since in the present case, no approval of prescribed authority is available, the assessee’s claim for deduction is not allowable - Decided against the assessee. - ITA No.1859/Bang/2016 - - - Dated:- 31-8-2018 - Shri Sunil Kumar Yadav, Judicial Member And Shri Arun Kumar Garodia, Accountant Member For the Appellant : Smt. Sheetal Borkar, Advocate For the Respondent : Dr. P.V. Pradeep Kumar, Addl. CIT (DR) ORDER Per Shri A.K. Garodia, Accountant Memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st u/s.234C of the Act. 7. For these and other grounds that may be urged at the time of hearing of the appeal the appellant prays that the appeal may be allowed. 3. The ld. AR of assessee reiterated the same contentions which were raised before CIT (A). As against this, the ld. DR of revenue supported the order of CIT (A) and placed reliance on the Tribunal order rendered in the case of Electronics Corpn. of India Ltd. Vs. ACIT as reported in [2012] 28 taxmann.com 280(Hyd.) and the judgement of Hon'ble Karnataka High Court rendered in the case of Tejas Networks Ltd. Vs. DCIT as reported in [2015] 60 taxmann.com 309 (Karnataka). He submitted copy of the Tribunal order and the judgement of Hon'ble Karnataka High Court and su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the research and development carried out by the assessee company, if any, would give him enduring benefit and such the expenditure is capital in nature and cannot be allowed as revenue expenditure. Based on lack of evidence, the claim of deduction of the assessee towards expenses of research and development of ₹ 1,04,60,447/- is disallowed and added to the income. 6.1 During the course of appeal before me the assessee in his written submission dt. 14.06.2016, the appellant contended that it has paid the R D expenses to its 100% subsidiary company for carrying out research and development on behalf of the company, and the payment was made to subsidiary against the quarterly debit notes raised by the subsidiary, and these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, if he were to undertake the exercise of examining as to whether the certificate issued by the prescribed authority is within the parameters of statutory provisions of the Act or otherwise. The Hon'ble Karnataka High Court has also noted the sub-section (3) to section 35 of the Act wherein it is provided that no company shall be entitled for deduction under clause (1) unless it enters into an agreement with the prescribed authority for cooperation in such research and development facility and fulfils such conditions with regard to maintenance of accounts and audit thereof and furnish reports in such manner as has been prescribed. Although in that case, the application was filed by the assessee for approval of Secretary, Department of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to a deduction of a sum equal to one and half times of the expenditure so incurred. The word Scientific Research has been defined under subsection (4) of Section 43 of the Act, which is extracted supra and same would indicate expenditure incurred in such scientific research includes all expenditure incurred for the prosecution or the provision of facilities for the prosecution of such scientific research. However, it does not include expenditure incurred in the acquisition of rights in or arising out of scientific research. Such expenditure incurred should be approved by the authority prescribed under Section 35(2AB) of the Act read with Rules framed thereunder. The authority prescribed to grant such approval under Rule 6(1B) of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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