Case Law Details
Omni Active Health Technologies Ltd Vs ACIT (ITAT Mumbai)
The issue under consideration is whether the deduction u/s 35(2AB) towards research and development expenditure claimed by assessee is justified in law?
In present case, the assessee claimed deduction u/s 35(2AB) being 200% of amount incurred towards scientific research. The perusal of approvals from DSIR in Form No.3CM and working of deduction u/s 35(2AB) as per return of income and as per Form No. 3CL reflected difference of Rs.10.54 Lacs. Accordingly, the same was disallowed and added to the income of the assessee.
ITAT states that as per sub-section (2AB), it is provided that facility has to be approved by the prescribed authority, then there shall be allowed deduction of expenditure incurred whether 100%, 150% or 200% as prescribed from time to time. Under the amended provisions, the prescribed authority as in part A give approval of the facility and in part B quantify the expenditure eligible for deduction under section 35(2AB) of the Act. The issue which is raised before us relates to pre-amended provisions and question is where the facility has been approved by the prescribed authority, can the deduction be denied to the assessee under section 35(2AB) of the Act for non issue of form No.3CL by the said prescribed authority or the power is with the Assessing Officer to look into the nature of expenditure to be allowed as weighted deduction under section 35(2AB) of the Act.
Further they state that 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.
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