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TMI Blog1992 (11) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... ing that the expenditure incurred on plant and machinery utilised for scientific research should be included in the capital computation for the purpose of section 80J in view of rule 19A(2) even though 100 per cent. deduction had been given in respect of the said expenditure under section 35 of the Income-tax Act, 1961 ?" During the three assessment years in question, the Income-tax Officer had not taken into account certain amounts representing the cumulative total of expenditure incurred by the assessee on plant and machinery utilised for scientific research upon which the assessee was allowed 100 per cent. deduction in the respective assessments under the provisions of section 35 of the Act. On appeal by the Revenue, the Appellate Assi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l first be ascertained in the following manner : (i) in the case of assets entitled to depreciation, their written down value; (ii) in the case of assets acquired by purchase and not entitled to depreciation, their actual cost to the assessee ; (iii) in the case of assets acquired otherwise than by purchase and not entitled to depreciation, the value of the assets when they became assets of the business ; (iv) in the case of assets being debts due to the person carrying on the business, the nominal amount of those debts (v) in the case of assets being cash in hand or bank, the amount thereof. . . . " As far as the assets on which relief under section 35 of the Act had been claimed by the assessee are concerned, there cannot be any d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r purpose. The Andhra Pradesh High Court held that the fact that deduction is given for the purpose of computing taxable income under section 35 for expenditure on scientific research does not mean that it ceases to be capital employed or an asset. We are in agreement with this part of the statement of law on the third question decided by the said High Court. In fact, in our view, rule 19A(2) deals with both situations. If the assets are entitled to depreciation for the purpose of computation, then their written value has to be taken into consideration. If the assets are not entitled to depreciation, then the value of the assets, when they became assets of the business, has to be taken into consideration. Since, in the case of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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