10. Weighted deduction for sum paid to a company to be used by such company for scientific research

10.1 In order to encourage the outsourcing of scientific research, a new clause (iia) in sub-section (1) of section 35 of the Income-tax Act has been inserted to allow a weighted deduction of 125 per cent of the amount paid by a person to an approved company to be used for scientific research subject to prescribed conditions. To avoid multiple claims of deduction by a company approved to receive such payments under clause (iia) of sub-section (1) of section 35, sub-clause (6) has been inserted to provide that the existing deduction of 150% under sub-section (2AB) of section 35 for in-house research will not be available to a company which has been approved for receiving payments for outsourcing of scientific research under the provisions of clause (iia) of sub-section (1) of section 35. However, deduction to the extent of 100% of the sum spent as expenditure on scientific research which is available under clause (i) of sub-section (1) of section 35 will continue to be allowed to such companies.

10.2 Applicability: These amendments have been made applicable with effect from 1st April, 2009 and shall accordingly apply for assessment year 2009-10 and subsequent assessment years.

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Category : Income Tax (25503)
Type : Circulars (7563) Notifications/Circulars (30678)
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