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TMI Blog2024 (6) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... able opportunity of being heard. This ground of the assessee is partly allowed for statistical purposes. Disallowance of depreciation on goodwill on amalgamation - HELD THAT:- As decided in own case for 2010-11 [ 2024 (1) TMI 1295 - ITAT MUMBAI] on a careful perusal of the sixth proviso to sec. 32(1) of the Act, we noticed that the same is applicable only in a situation where the amalgamation takes place in the middle of the year i.e. the said proviso states that the aggregate amount of depreciation claimed by the amalgamating companies and amalgamated company for that year should not exceed eligible amount of depreciation of that year. In the instant case the amalgamation has taken place on 1.4.2009 and not in the middle of the year. Hence the sixth proviso to section 32(1) will not apply to the facts of the present case. Accordingly we set aside the reasoning given by the learned CIT(A) for confirming the disallowance of depreciation of goodwill. We noticed earlier that both the tax authorities have not examined the factual aspects relating to the goodwill amount of Rs.21.81 crores and also the depreciation claimed thereon. Hence the assessee also did not get opportunity to put f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00% of profits derived from Export Oriented Unit before considering the additions/deletions - HELD THAT:- For the year under consideration the assessee has not raised this issue before the lower authorities and therefore respectfully following the above decision of the Tribunal we remit the issue back to AO for examination with a direction to decide keeping in mind the decision of coordinate bench in the case of Reliance Industries Ltd [ 2020 (12) TMI 165 - ITAT MUMBAI] and decide in accordance with law. This ground is allowed for statistical purposes. Allowability of mark to market (MTM) loss u/s 37(1) - AO rejected the assessee s alternate plea that since section 43(5) is not applicable the MTM losses should be allowed under section 28 or 37(1) of the Act - HELD THAT:- As in own case for AY 2012-13[ 2024 (1) TMI 1295 - ITAT MUMBAI] nature of these items is not clear and we notice that no tax authority has examined these items. If these transactions have been entered in the course of carrying on of regular business activities and the underlying assets are trading items, the loss arising on their revaluation at the year end is allowable as deduction. It is to be seen that the under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. The issues contended in these appeals and the C.O are common and therefore these appeals are heard together and disposed of through this common order. 2. The issues contended in the above appeals and the C.O are tabulated as under: Issues ITA No.77/M/21 ITA No. 1242/M/21 ITA No. 1241/M/21 CO No. 1/M/22 General C.O. No.1 Disallowance of depreciation on unverified purchases and other expenses Ground No.1 Disallowance of depreciation on goodwill on amalgamation Ground No.2 Transfer Pricing Adjustment on letter of comfort Ground No.3 Initiation of penalty proceedings u/s 271(1)(c) Ground No.4 Mark to market loss allowed as deduction under section 37(1) Ground No.1 C.O. No. 2 to 4 Disallowance of sales promotion expenses Ground No.2 Expenditure on Employee's stock option Ground No.3 C.O. No. 5 Weighted deduction u/s 35(2AB) Ground No. 4 & 5 Ground No.1 to 3 Pre-commencement expenses Ground No.6 C.O. No. 6 Deduction u/s 10AA Additional Ground No.5 Deduction of Education Cess Additional Ground No.6 3. The assessee vide letter dated 17.08.2023 withdrew the additional ground no.6 and hence the same is dismissed as withdrawn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition under section 40(a)(v) of the Act towards non-monertary perquisites were made to the tune of Rs. 2,95,87,707 accordingly assessing the book profit at Rs. 17,31,91,70,282/- under section 115JB of the Act. 6. Aggrieved the assessee filed further appeal before the CIT(A) partly allowed the appeal by granting relief to the assessee in respect of the following: * Disallowance of Mark to market loss of Rs. 1,18,20,185 * Disallowance of sales promotion expenses amounting to Rs. 82,30,32,740 * Weighted Deduction under Section 35(2AB) of the Act on Clinical & Analytical Charges of Rs. 49,94,52,208; * Weighted deduction under Section 35(2AB) of the Ac other R&D expenditure of Rs. 8,17,46,000 (through rectification under section 154 of the Act) * Disallowance of ESOP expenditure of Rs. 34,65,39,003 not debited to P&L * Pre-commencement revenue expenses incurred at Pithampur SEZ Plant II and Nagpur SEZ Plant of Rs. 2,89,59,855 * Additional depreciation on asset put to use less than 180 days of Rs.7,42,63,633; * Addition of tax on non-monetary perquisites to book profits under section 115JB of the Act of Rs. 2,95,87,707 * Transfer Pricing Adjustment on account of Cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al depreciation on the written down value of the assets. The relevant observations of the coordinate bench are extracted below - Unverified Expenditure "6.4 In our view, we may leave aside the issue as to whether the said retraction is valid or not, since the assessee is supporting its stand for not disallowing these expenses on merits. In our view, the stand of the assessee, in the facts and circumstances of the case, merits acceptance. First of all, there is no dispute that the amount of Rs.48,89,052/- is not in the nature of commission expenses, i.e., the assessee has admitted that it has booked bogus expenses by way of commission payments only. Secondly, it has furnished the details of materials purchased through these bills, delivery challans etc., to prove receipt of materials. The assessee has also explained the reason as to why these expenses were not added to the total income while computing total income. We notice that the tax authorities have ignored all these aspects on merits, but placed their reliance on the statement made u/s 132(4) of the Act. The provisions of sec.132(4) enables the assessing officer to presume that the admission made in the statement "may be" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hah, which was referred to by the AO, the assessee submitted that it has not made any purchases from the concerns belonging to the above said person during the year under consideration. On legal aspects, the assessee has contended that the addition could not be made merely on the basis of statement given on oath. 7.5 The ld D.R, on the contrary, supported the orders passed by tax authorities on this issue. 7.6 We notice that the assessing officer has entirely placed his reliance on the statement given by the employees and directors of the assessee u/s 132(4) of the Act. Besides the above, the AO has also placed reliance on the statement given by Shri Naresh Kantilal Shah, one of the accommodation entry providers and also the statement given by the Vice President (Taxation). However, we notice that the surrender made by him was not added by the AO. We notice that the assessing officer did not examine the explanations of the assessee as to why it was constrained to make surrender towards alleged bogus purchases. Though there was no specific retraction of the surrender so made, yet we have noticed earlier that the surrender made in the statement recorded u/s 132(4) of the Actcan be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-company and its wholly owned subsidiaries namely Lupin Pharmacare Ltd., Lupin Herbal Ltd. and Novodign Ltd. w.e.f. 01.04.2009. The amalgamation was accounted in the books of the assessee as per pooling of interest method prescribed by Accounting Standard-14. In terms of the scheme all Assets & Liabilities of the transferor company have been transferred to the assessee-company at their respective book value and all intercompany balances were canceled. Since the transferor companies were wholly owned subsidiaries of the assessee, the shares held by assessee in the transferor company were cancelled and no shares were issued to effect the amalgamation. After giving effect the accounting treatment in terms of the scheme the balance lying in the investment account of the assessee aggregating to Rs. 21.81 crores pertaining to purchase of Novodign Ltd. was shown as goodwill in the accounts of the assessee company. The said amount is arising out the acquisition of shares of the said company by the assessee at a higher price in earlier years. The assessee amortized the goodwill over a period of five years in the books of accounts beginning from AY 2010-11. The assessee claimed the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in lieu of investments already made. (c) the excess payment was made voluntarily. (d) such excess payment was a conscious decision, i.e, the buyer should be visualizing some business advantage and hence it was paying higher consideration that the value of net assets. (e) The business advantage so visualized by the assessee is considered as an intangible asset eligible for depreciation. 7.8 In the instant case, the assessee has acquired its subsidiary companies by taking over their assets and liabilities in lieu of investments made by it. The above said short fall shall be termed as "goodwill" as per accounting principles. The question is whether such kinds of goodwill would fall under the category of business or commercial rights as mentioned in section 32(1)(ii) of the Act, which was interpreted by Hon'ble Supreme Court in the case of Smiffs Securities Ltd (supra). Hence it is imperative for the assessee to show that the good will, being short fall in the value of investments, would also rank at par with the good will which was considered as business or commercial rights as mentioned in sec. 32(1)(ii) of the Act. However, the fact remains that both the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 (Bom.)) and the decision of Co-ordinate Bench in the case of Glenmark Pharmaceuticals Ltd. (ITA No. 5031/Mum/2012 dated 13.11.2013) to make an adjustment of 1.5% towards Guarantee Commission. The relevant observations of the TPO are extracted below: "v) In view of the detailed discussion above, following the recent decision of Hon'ble Bombay High Court in the case of Everest Kanto, and Mumbai ITAT in Glenmark Pharmaceuticals Ltd. in ITA No.5031/Mumbai/2012 dated 13.11.2013 (A.Y. 2008- 09), a downward adjustment to the naked quotes of the rates of bank Guarantee has been done in this year, while benchmarking the transaction. It is seen that the bank guarantee rates vary generally between 1% to 3% giving an average of about 2.0%. Accordingly, it would be appropriate to charge 1.5% from the AΕ (average bank guarantee fee charged by bank less 0.50%)." 15. On further appeal the CIT(A) upheld the TP Adjustment by stating that the letter of comfort given by the assessee is nothing but the guarantee given by the assessee and that the assessee is having a financial obligation to the Bank. Therefore, the CIT(A) held that it is an international transaction warranting a TP Adj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AE i.e.borrower as extracted by the CIT(A) in his order which is reproduced below - "I have gone through the above and TPO's order, It can be held that it would depend on the nature letter of comfort issued to a bank to give a finding that a particular transaction constitute a guarantee or not. Therefore to held letter of comfort as international transaction/ transaction providing guarantee, it has to be seen whether the letter of comfort cast any additional obligation on the assessee and whether there could be any financial liability on the assessee. In the present case........ The appellant have issued a letter of comfort to ANZ Manila, Philippines. In the Letter of Offer, the following two clauses address the aforementioned issue. In Clause 1, dealing with the Conditions Precedent, one of the conditions is "Lodgment of other documentary requirements to ANZ's satisfaction including the issuance and delivery of letter of comfort from Lupin Limited." In addition, in Clause 3 detailing Mandatory requirement, it is stipulated that the Borrower shall prepay all outstanding or provide cash cover (as appropriate) under the facility if the appellant ceas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of additional ground. Keeping into consideration the entire conspectus of the facts and circumstances of the case and the additional ground raised before us we are convinced that its adjudication does not require any fresh investigation of facts and involves only legal issue. Respectfully following the judgement of the Hon'ble Supreme Court in the case of National Thermal Power Company Ltd. Vs. CIT [(1998) 229 ITR 383 (SC)] we admit this additional ground for disposal on merits. 21. The ld AR submitted that a similar issue was contended before the coordinate bench for AY 2009-10 where the Tribunal has remitted the issue back to the AO for examination. The ld AR however submitted that the coordinate bench in the case of Reliance Industries Ltd. [(ITA No. 7299 & 136/Mum/2017) dated 10 November 2020] where it has been held that deduction under Section 10AA/10B should be computed considering only the commercial profits derived by SEZ/EOU units from exports and not net profit after adjusting various additions/disallowances under Income Tax Act. Accordingly the ld AR prayed that the issue may be decided by the bench for the year under consideration. 22. The ld DR relied on the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with law. This ground is allowed for statistical purposes. I.T.A. No. 1242/Mum/2021 - Revenue's appeal Allowability of mark to market (MTM) loss under section 37(1) - Ground No.1 25. For the year under consideration the assessee had provided for loss arising on the outstanding derivatives contracts in respect of foreign exchange receivables and derivatives contract which were valued at the year end. Accordingly, the assessee provided for MTM loss of Rs. 1,18,20,185/-. The AO disallowed the expenditure by placing reliance on the CBDT Instruction No. 3/2010 dated 23.03.2010. The AO also rejected the assessee's alternate plea that since section 43(5) is not applicable the MTM losses should be allowed under section 28 or 37(1) of the Act. Aggrieved the assessee filed appeal before the CIT(A). The CIT(A) deleted the disallowance by placing reliance on the decision of the Hon'ble Bombay High Court in assessee's own case for AY 2008-09 and the order of his predecessor for AY 2009-10. Against the order of the CIT(A) the department is in appeal before the Tribunal. 26. The ld DR placed reliance in the order of the AO. The ld. AR brought to our attention that this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... endered by the Tribunal in the assessee's own case has since been upheld by Hon'ble Bombay High Court, vide its order dated 2nd April, 2019 in ITA No. 1532 of 2017. In the case of M/s D Chetan & Co. (supra), the Hon'ble Bombay High Court held as under:- "5. Being aggrieved, the Revenue preferred an appeal to the Tribunal. The impugned order of the Tribunal upheld the finding of the CIT (Appeals) that the loss incurred by the Respondent Assessee was a revenue loss and not connected with any speculation activities. The Tribunal found that the transaction of forward contract had been entered into for the purpose of hedging in the course of its normal business activities of import and export of diamonds. Thus, the Revenue's appeal was dismissed by the impugned order of the Tribunal. 6. Mr. Malhotra, learned Counsel appearing for the Revenue submits that this appeal had to be admitted as the impugned order has ignored its order in the case of S. Vinodkumar Diamonds (P.) Ltd. v. Addl. CIT [2013] 59 SOT 124/35 taxmann.com 337 (Mum. - Trib.) rendered on 3 May 2013 which on similar facts is in favour of the Revenue. He further submits that the impugned order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar to the present facts, then reliance would have been placed by the Revenue upon it at the hearing before the Tribunal. The impugned order does not indicate any such reliance. It appears that in S. Vinodkumar Diamonds (P.) Ltd. (supra), the Tribunal held the forward contract on facts before it to be speculative in nature in view of Section 43(5) of the Act. However, it appears that the decision of this court in CIT v. Badridas Gauridu (P.) Ltd. [2003] 261 ITR 256/[2004] 134 Taxman 376 (Mum.) was not brought to the notice of the Tribunal when it rendered its decision in S. Vinodkumar Diamonds (P.) Ltd. (supra). In the above case, this court has held that forward contract in foreign exchange when incidental to carrying on business of cotton exporter and done to cover up losses on account of differences in foreign exchange valuations, would not be speculative activity but a business activity. 8. In the above view, the question of law, as formulated by the Revenue, does not give rise to any substantial of law. Thus, not entertained." The Ld CIT(A) has followed the decision rendered by Hon'ble jurisdictional High Court and has decided this issue in favour of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal in ITA No. 395/Mum/2021 read with order passed in M.A. No. 193/Mum/2023 arising out of ITA No. 395/Mum/2021 relating to A.Y. 2009- 10. The final decision rendered by the Tribunal is extracted below by culling out relevant observations from the main order and the order passed in the Miscellaneous Application filed by the assessee:- From Main Order:- "15.1 The Ld CIT(A) allowed the claim of the assessee following the decision rendered by Special bench of Bangalore ITAT in the case of Biocon Ltd vs. DCIT (144 ITD 21). It is pertinent to mention that the decision rendered by the Special bench has since been upheld by the Hon'ble Karnataka High Court in 430 ITR 151. 15.2 The Ld D.R submitted that the Circular no. 9 of 2007 issued by CBDT has not been considered by the Special bench or by the Hon'ble High Court of Karnataka. 15.3 We heard Ld A.R and perused the record. It is well settled proposition that the Circular issued by CBDT is binding only on tax authorities and it will not bind on the Courts. The Hon'ble Karnataka High Court has dealt with this issue as under in the case of Biocon Ltd (supra) as under:- "9. In the instant case, the ESOPs vest in an employee ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vesting date and the price at which shares are offered to the employees. This discount is usually amortised over the vesting period. The employee need not exercise option at the time of vesting itself. (b) The second type of discount arises at the time of "actual exercise of option" by the employees and it represents the difference between the fair market value of the equity shares on the date of vesting of option and the date of exercise of option. In the instant case, the amount of Rs.5,74,85,066/- claimed by the assessee represents the second type of discount mentioned in (b) above, i.e., the additional discount arising at the time when the employees actually exercise option. It is the submission of the assessee that the first type of discount did not arise in the instant case, since there was no difference between market price of equity shares and the price at which the shares were offered to the assessee. As per the decision rendered by the Special bench of Bangalore ITAT in the case of Biocon Ltd (supra), the second type of discount arising at the time of actual exercise of option by the employees is also allowable as deduction. This is clear from the discussions made by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntants." From the above observations there is not even an iota of doubt in our minds that there can be no question of following the accounting principle or Guidance notes etc. in the matter of determination of total income. 11.2.9. The trump card of the ld. AR to bolster his submission for assigning the status of binding force to the SEBI Guidelines is the order in the case of SSI Limited (supra) which came to be affirmed by the Hon'ble Madras High Court in PVP Ventures (supra). We have noticed above that the said case dealt a situation falling within one of the three years of the vesting period, in which it was held that one third of the total amount of discount computed on the basis of the market price of the shares at the time of grant of option, is deductible. It is evident from the SEBI Guidelines that these deal with the deductibility of discount in the hands of company during the years of vesting period. These Guidelines are silent on the position emanating from variation in the market price of the shares at the time of exercise of option by the employees vis-à-vis the market price at the time of grant of option. In other words, the SEBI Guidelines prescrib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the matter of computation of total income under the Act. The question before the special bench is thus answered in affirmative by holding that discount on issue of Employee Stock Options is allowable as deduction in computing the income under the head `Profits and gains of business or profession'." We notice that the assessee has also paid "fringe benefit tax" on the second type of discount (referred supra). It is well settled principle of taxation that the entries made or otherwise in the books of account are not relevant for computing total income, i.e., the total income has to be computed as per the provisions of Income tax Act. If the deduction is otherwise allowable as deduction in computing total income, the same is allowable irrespective of the fact whether the same is accounted in the books of account or not. We notice that this principle has been applied by the Special bench with regard to second type of discount. Accordingly, we are of the view that the Ld CIT(A) was justified in allowing the deduction of Rs.5,74,85,065/- claimed by the assessee. Accordingly, we uphold the order passed by Ld CIT(A) on this issue." 12.2 Since the facts are identical in this year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gible for weighted deduction u/s 35(2AB) of the Act? (b) Whether the weighted deduction u/s 35(2AB) could be allowed during the year under consideration, even if the expenditure has not been certified by DSIR in Form no.3CL? (c) Whether expenditure incurred prior to the date of approval could be allowed as deduction? (d) Whether the deduction u/s 35(2AB) could be allowed in the absence of approval of scientific research in-house facility by DSIR? 14.4 With regard to the first question, conflicting views have been expressed by different benches of the Tribunal. However, Hon'ble Gujarat High Court has considered this issue as under in its decision reported in the case of Cadila Healthcare Ltd (2013)(31 taxmann.com 300)(Guj) as under:- "11.Revenue has also suggested following question : "D. Whether the Appellate Tribunal has substantially erred in holding that the expenses incurred outside the approved R&D facility would also get weighted deduction based on the word under "on in house" interpreting contradictorily to the finding of coordinate bench in Concept Pharmaceuticals Ltd. v. ACIT (ITAT, Mum) reported at 43 SOT 423?" 12. We may record that ques ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xpenditure 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 patent under the Patents Act, 1970 (39 of 1970)." 15. Such explanation thus provides that for the purpose of said clause, i.e. clause (1) of section 35(2AB), 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 the Central, State or Provincial Act and filing an application for a patent under the Patents Act, 1970. 16. The whole idea thus appears to be to give encouragement to scientific research. By the very nature of things, clinical trials may not always be possible to be conducted in closed laboratory or in similar in-house facility provided by the assessee and approved by the prescribed authority. Before a pharmaceutical drug could be put in the market, the regulatory authorities would insist on strict tests and research on all possible aspects, such as possible reactions, e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c research was undertaken. What the Legislature desired to encourage by granting deduction under section 35(1) of the Act was a scientific research and not necessarily only the successful scientific research undertaken by an assessee." 18. We are, therefore, of the opinion that the Tribunal committed no error. Merely because the prescribed authority segregated the expenditure into two parts, namely, those incurred within the in-house facility and those can were incurred outside, in our opinion, by itself would not be sufficient to deny the benefit to the assessee under section 35(2AB) of the Act. It is not as if that the said authority was addressing the issue for deduction under section 35(2AB) of the Act in relation to the question on hand. The certificate issued was only for the purpose of listing the total expenditure under the Rules. Therefore, no question of law arises." It can be noticed that the Hon'ble Gujarat High Court, after making extensive discussion on the issue and after holding that the Tribunal has committed no error, refused to admit the issue by observing no question of law arises. The revenue has challenged before Hon'ble Supreme Court the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AB) of the Act. Since the facts are identical in this year also and since the decision rendered by Ld CIT(A) on this issue is in accordance with the decision rendered by the co- ordinate bench in AY 2009-10, we uphold his order passed on this issue. 34. The facts for the year under consideration being similar respectfully following the above decision we uphold the decision of the CIT(A) in allowing weighted deduction towards clinical trial expenses outside the in- house facility. This ground of the revenue is dismissed. Pre-commencement Expenses - Ground No.6 35. The assessee while filing the revised return of income claimed pre- production commencement revenue expenditure pertaining to Pithampur SEZ Plant-II and Nagpur SEZ to the tune of Rs. 2,89,59,855/-. The AO by following the decision of his predecessor disallowed the said expenditure. The CIT(A) gave relief to the assessee by directing the AO to allow the expenditure as revenue expenditure. The ld. AR submitted that the issue is covered by the decision of the Co-ordinate Bench in assessee's own case for AY 2010-11 and accordingly prayed that the CIT(A) decision be upheld. 36. We have heard the parties and perused th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 35(2AB) of the Act. 14.6 The next question is whether expenditure incurred prior to the date of approval could be allowed as deduction? Both these questions are answered together. 14.7 The legal sanctity of Form no.3CL was examined by the Pune bench of ITAT in the case of Cummins Ltd vs. DCIT (ITA No.309/Pun/2014 dated 15.5.2018 relating to AY 2009-10). It was held as under:- "45. The issue which is raised in the present appeal is that whether where the facility has been recognized and necessary certification is issued by the prescribed authority, the assessee can avail the deduction in respect of expenditure incurred on in-house R&D facility, for which the adjudicating authority is the Assessing Officer and whether the prescribed authority is to approve expenditure in form No. 3CL from year to year. Looking into the provisions of rules, it stipulates the filing of audit report before the prescribed authority by the persons availing the deduction under section 35(2AB) of the Act but the provisions of the Act do not prescribe any methodology of approval to be granted by the prescribed authority vis-à-vis expenditure from year to year. The amendment brought in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevance. What is to be seen is that the assessee was in indulging in R&D activity and had incurred the expenditure thereupon. Once a certificate by DSIR is issued, that would be sufficient to hold that the assessee fulfils the conditions laid down in the aforesaid provisions. The Hon'ble Delhi High Court followed the decision of the Hon'ble Gujarat High Court and upheld the decision of the Tribunal. The Hon'ble Delhi High Court quoted the following observations of the Hon'ble Gujarat High Court and agreed with the said view: "7 The lower authorities are reading more than what is provided by law. A plain and simple reading of the Act provides that on approval of the research and development facility, expenditure so incurred is eligible for weighted deduction. 8. The Tribunal has considered the submissions made on behalf of the assessee and took the view that section speaks of : (i) development of facility; (ii) incurring of expenditure by the assessee for development of such facility; (iii) approval of the facility by the prescribed authority, which is DSIR; and (iv) allowance of weighted deduction on the expenditure so incurred by the assessee. 9. The p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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