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TMI Blog2023 (12) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be cut-off date for eligibility of weighted deduction on the expenses incurred from that date onwards. A plain reading clearly manifests that the assessee has to develop facility, which presupposes incurring expenditure in this behalf, application to the prescribed authority, who after following proper procedure will approve the facility or otherwise and the assessee will be entitled to weighted deduction of any and all expenditure so incurred. Tribunal has, therefore, come to the conclusion that on plain reading of section itself, the assessee is entitled to weighted deduction on expenditure so incurred by the assessee for development of facility.Tribunal has also considered Rule 6(5A) and Form No. 3CM and come to the conclusion that a plain and harmonious reading of Rule and Form clearly suggests that once facility is approved, the entire expenditure so incurred on development of R D facility has to be allowed for weighted deduction as provided by Section 35(2AB). No scope for any other interpretation and since the approval is granted during the previous year relevant to the assessment year in question, we are of the view that the assessee is entitled to claim weighted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act from 20.11.2012 to 31.3.2015, yet it did not assign any reason for curtailing the period from 1.4.2012 to 19.11.2012 for which the assessee filed a letter on 29.6.2013 and thereafter on 29.11.2013 to DSIR. However, no reply was received from DSIR. It was the plea of the assessee that once the R D facility is approved by DSIR, the expenditure incurred thereon would be allowable as weighted deduction to the assessee u/s 35(2AB) of the Act. The total expenditure incurred on R D facility by the assessee is as under:- Towards capital expenditure Rs 51,79,065/- Towards revenue expenditure - Rs 2,49,15,390/- 5. In the return of income, the assessee claimed deduction u/s 35(2AB) of the Act for Rs 3,52,73,520/- [Revenue expenditure of Rs 2,49,15,390/- and capital expenditure of Rs 1,03,58,130/- (51,79,065*2)]. The ld. AO restricted the deduction to Rs 1,53,80,000/- on the ground that DSIR had approved weighted deduction u/s 35(2AB) of the Act to the extent of Rs 96.08 lacs on account of revenue expenditure and Rs 57.72 lacs (Rs 28.86 lacs *2) on account of capital expenditure. Accordingly, a sum of Rs 1,53,07,390/- on revenue account and Rs 45,86,130/- on capital account aggrega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e., assessment year 2005-2006, the assessee claimed a deduction of Rs. 3,83,62,003/- under Section 35 (2AB) of the Income Tax Act (hereinafter referred to as the Act ). The business expenses incurred are naturally allowed as deductions, however, the aforesaid provisions gives weighted deduction to the assessees, who are engaged into research and development activity. The objective is to encourage research and development by the business enterprises in India. 2. The provision further states that in order to claim this weighted deduction, it is to be certified by the Competent Authority that the assessee had undertaken research and development activity. The competent authority in this behalf is Department of Scientific Industrial Research (DSIR). The assessee had approached DSIR vide application dated 10th January, 2005. The DSIR vide its letter dated 23rd February, 2006 granted recognition of the in-house R D facilities of the assessee company and also granted approval for the expenses incurred by the company on in-house R D facility in prescribed form 3CM by letter dated 18th September, 2006. The Assessing Officer, however, refused to accord the benefit of the aforesaid pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learly manifests that the assessee has to develop facility, which presupposes incurring expenditure in this behalf, application to the prescribed authority, who after following proper procedure will approve the facility or otherwise and the assessee will be entitled to weighted deduction of any and all expenditure so incurred. The Tribunal has, therefore, come to the conclusion that on plain reading of section itself, the assessee is entitled to weighted deduction on expenditure so incurred by the assessee for development of facility. The Tribunal has also considered Rule 6(5A) and Form No. 3CM and come to the conclusion that a plain and harmonious reading of Rule and Form clearly suggests that once facility is approved, the entire expenditure so incurred on development of R D facility has to be allowed for weighted deduction as provided by Section 35(2AB). The Tribunal has also considered the legislative intention behind above enactment and observed that to boost up research and development facility in India, the legislature has provided this provision to encourage the development of the facility by providing deduction of weighted expenditure. Since what is stated to be promoted w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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