Scientific research expenditure under Section 35(2AB) incurred during the period prior to the approval: Eligibility for weighted deduction
- The Assessee claimed a deduction under section 35(2AB) being 200% of amount incurred towards scientific research.
- The perusal of approvals from Department of Scientific and Industrial Research in Form No.3CM and working of deduction under section as per return of income reflected a difference of Rs.10.54 lacs for the pre-amended period.
- Accordingly, the Assessing Officer disallowed the same and added to the income of the Assessee.
- The Tribunal placed reliance on decision laid down in the case of Cummind India Ltd Vs. Deputy Commissioner of Income Tax wherein it was held that since the approval was granted during the previous year the Assessee was entitled to claim weighted deduction in respect of the entire expenditure incurred under Section 35(2AB) of the Act by the Assessee.
- It was observed that the legislative intention behind the enactment of Section 35(2AB) was to boost up facility in India and 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 was development of facility, intention of the legislature by making amendment to rules was very clear that the entire expenditure incurred by the Assessee on development of facility, if approved, has to be allowed for the purpose of weighted deduction.
- Respectfully following the same in case of the Assessee, the Assessing Officer was not justified in curtailing the deduction under section 35(2AB) in the pre-amended period.