PCIT Vs Cadila Healthcare Limited (Gujarat High Court)
Summary: The Gujarat High Court admitted the Revenue’s appeal under Section 260A of the Income Tax Act, 1961, in the case of Principal Commissioner of Income Tax (Central) Vs Cadila Healthcare Limited for Assessment Year 2013-14 on questions concerning guarantee fee, interest on convertible loan, product registration expenditure, trademark and patent fees, research and development expenditure and computation of book profit under Section 115JB.
The Court noted that questions relating to guarantee fee, interest on convertible loan, product registration expenditure, trademark registration and patent fee, expenses incurred outside the approved R&D facility under Section 35(2AB), and exclusion of Section 14A disallowance while computing book profit under Section 115JB were already admitted for consideration in Tax Appeal No.590 of 2022. Accordingly, questions A, B, C, D, F and H were admitted.
In relation to Section 35(2AB), the Court relied upon its earlier decision in Banco Products India Ltd. Vs DCIT, which had followed the principles laid down in Claris Lifesciences Ltd. and the Delhi High Court decision in Maruti Suzuki India Ltd. Vs Union of India. The Court held that once the prescribed authority grants approval/recognition to the R&D facility, the deduction cannot be denied merely because the approval was granted in a subsequent year.
