Deepak Nitrite Limited Vs DCIT (ITAT Mumbai)
The Mumbai ITAT considered the assessee’s appeal against the CIT(A), NFAC order dated 11.11.2025 for AY 2019-20 concerning deductions for scientific research expenditure. The Assessing Officer had initially disallowed the entire Section 35(2AB) claim of Rs.13,39,61,590, representing 150% of Rs.8,93,07,727 spent on the in-house R&D facility because Form No. 3CL from DSIR was unavailable during assessment. After DSIR issued Form No. 3CL on 22.03.2022 certifying eligible expenditure of Rs.8,39,46,891, the AO, through rectification, allowed Rs.12,59,20,336 under Section 35(2AB).
The assessee represented to DSIR regarding the difference of Rs.53.61 lakh between the expenditure claimed and certified, and the representation remained pending. The ITAT held that the surviving Section 35(2AB) dispute concerned only the quantum certified by DSIR. It restored this limited issue to the AO, directing consequential relief if DSIR revises, enhances or modifies the certified expenditure, after giving the assessee an opportunity of hearing. This ground was allowed for statistical purposes.
As an alternative, the assessee claimed that expenditure not approved by DSIR for Section 35(2AB) should independently qualify under Section 35(1)(i) as revenue expenditure on scientific research related to its business. The AO and CIT(A) had rejected this claim solely because the expenditure was not approved by DSIR under Section 35(2AB).
