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2012 (9) TMI 43 - ITAT MUMBAIDisallowance of weighted deduction u/s 35(2AB)(1)- expenditure incurred on clinical trials - Held that:- Considering the same very issue which was considered by the Tribunal in assessee's own case for assessment year 2006-07 that the expenditure on scientific research eligible for weighted deduction under section 35(2AB), should be the expenditure on scientific research on in-house research and development facilities and, therefore, the action of the Assessing Officer to disallow weighted deduction of 50% was confirmed - against assessee. Disallowance of weighted deduction on expenditure incurred on rent, rate and taxes - Held that:- As it is evident that section 35(2AB) excludes from weighted deduction only cost of land and building and not any charges and expenses related to land or building. The repairs, rent, etc., the expenditure incurred relating to R&D premises cannot form part of cost of land or building. In the absence of any fact that the said claim of the assessee is not the expenditure on rents, rates and taxes relating to R&D premises the said expenditure has to form part of weighted deduction as per section 35(2AB) - in favour of assessee. Denial of weighted deduction on the claim as not reported in DSIR certificate, thus in the absence of any details submitted no point to interfere with the order of the Commissioner for denial - against assessee. Disallowance of weighted deduction in respect of consulting charges and patent filing charges - Held that:- As the consultancy charges had been paid by the assessee in providing technical services regarding the patents, obtaining patent information from innovator companies and obtaining innovator samples for R&D purposes, thus the payments have been accepted towards research and not towards registering the patents. Therefore, these expenditures have been incurred towards research expenses and not towards any patent filing. Explanation to section 35(2AB) specifically provides that the expenditure on scientific research for the purpose of section 35(2AB) shall include filing of application for a patent under The Patent Act, 1970, in relation to drugs and pharmaceuticals. Any application for patent foreign country has to be filed in India as per section 7 of The Patent Act, 1970, according to patent cooperation treaty. Therefore the said expenditure incurred towards patent filing charges is eligible for weighted deduction under section 35(2AB) - in favour of assessee. The expenditure for registering trade mark in India is a revenue expenditure and not capital expenditure - in favour of assessee. Treatment of expenses paid to the Associated Enterprises - international transaction for registration of Anti National Drug Application (ANDA) in USA - Revenue OR Capital - Held that:- As the Department has not disputed the fact that by ANDA registration, the assessee has completed the statutory requirement to sell the product in USA market and in the absence of such registration, the assessee may not be able to sell its product without hindrance. Considering the above facts, it is to be agreed that such expenditure has been incurred by the assessee for the purpose of its business which is to be allowed as revenue expenditure- in favour of assessee.
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