DCIT Vs Mahle Anand Thermal Systems Pvt. Ltd (ITAT Pune)
ITAT Pune held that entire amount of R&D expense in India is eligible for weighted deduction u/s. 35(2AB) and R&D capital expense outside India is eligible for deduction u/s. 35(1)(iv) of the Income Tax Act.
Facts- The assessee is engaged in the business of manufacturing of Automobile Ancillaries particularly Heat Exchangers i.e. Radiators, Evaporators, Condensers and Automotive Air Conditioning system.
AO made the disallowance of Rs.8,31,07,474/- being the weighted deduction u/s 35(2AB) of the Act and Rs.1,04,77,500/- being the Product Development expenses treating the same as Capital Expenditure as against Revenue expenditure claimed by the assessee.
In appeal, the Ld. CIT(A) allowed expenses incurred outside India on R&D u/s 35(1)(iv) although such claim was not under the same section but was u/s 35(2AB). CIT(A) allowed the Product Development expenses. Being aggrieved, revenue has preferred the present appeal.
Conclusion- In assessee’s own case for AY 2012-13 it is held the entire amount of R&D expenditure incurred in India is eligible for weighted deduction u/s 35(2AB); revenue R&D expenditure incurred outside India as claimed by the assessee got allowed in the assessment itself; total of capital R&D expenditure incurred outside India will be eligible for deduction u/s 35(1)(iv) of the Act.
