TMI Blog2012 (11) TMI 498X X X X Extracts X X X X X X X X Extracts X X X X ..... imself in the subsequent year i.e. 2009-10 in the order passed u/s 143(3) has discussed at length Sec. 80IB(8A) & Rule 18DA(1) and has finally concluded that the assessee is entitled to deduction u/s 80IB(8A). Appeal decides in favour of assessee - 3667 (Delhi) of 2010 - - - Dated:- 9-8-2012 - G.D. Agrawal And A.D. Jain, JJ. J.S. Ahlawat for the Appellant. M.S. Syali, Manish Upneja and Tarandeep Singh for the Respondent. ORDER G.D. Agrawal, Vice-President - The grounds raised in this appeal by the Revenue read as under:- "1. The order of ld. CIT(A) is wrong, perverse, illegal and against the provision of law, liable to be set aside. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y appreciating the facts of the case and the legal position. Therefore, the order of learned CIT(A) should be reversed and that of the Assessing Officer may be restored. 3. The learned counsel for the assessee, on the other hand, stated that Rule 18DA(2)(a) prohibits the sale of any prototype or output without the prior permission of the prescribed authority. That the assessee has not sold any prototype or output. It was simply rendering services to some of the pharmaceutical companies and receiving service charges. That rendering of services does not amount to sale of prototype or output. That Department of Scientific and Industrial Research Technology, Ministry of Science and Technology, is the prescribed authority under Rule 18DA. That ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such company - (i) is registered in India; (ii) has its main object the scientific and industrial research and development; (iii) is for the time being approved by the prescribed authority at any time after the 31st day of March, 2000 but before the 1st day of April, 2007; (iv) fulfils such other conditions as may be prescribed.]." 5. From the above, it is evident that deduction under Section 80IB(8A) is available to a company carrying on scientific research and development work provided the company is registered in India. Its main object is scientific and industrial research, which is approved by the prescribed authority and it fulfils the conditions as may be prescribed. In the case of the assessee, it is not in dispute t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roved under sub-rule (2) of rule 18D shall (a) sell any prototype or output, if any, from its laboratories or pilot plants with the prior permission of the prescribed authority; (b) intimate the change, if any, in its memorandum of association and articles of association relating to its main objects and forward the altered copy of its memorandum of association and articles of association to the prescribed authority; (c) apply for extension of the approval at least three months before expiry of the approval already granted by the prescribed authority; (d) have a system of monitoring the cost of research and development projects. (3) If, at any stage, it is found that (a) the approval granted to the company referred to in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has violated the prohibition provided by Rule 18DA(2)(a), i.e., it has sold the output by way of selling services to the pharmaceutical companies. However, we find that sub-rule (3) of Rule 18DA itself provides the consequence of violation of sub-rule (2). As per sub-rule (3), if at any stage it is found that any provisions of the Act or the rules have been violated, the prescribed authority specified may withdraw the approval so granted. Therefore, if there is a violation of sub-rule (2), the prescribed authority has to take action against the assessee by withdrawing the approval. In the case of the assessee, the prescribed authority has not withdrawn the approval of the assessee for the assessment year under consideration i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed all the agreements containing the research activities undertaken by it for its sponsors (M/s Ranbaxy and Other) with the DSIR. The said agreements have been obtained from the company and have been placed on records. The said agreements contain the elaborate process of research and development activities undertaken by it, research activities in progress as well as research activities proposed and planned during the year. 10. The assessee company has sought approval from the DSIR by furnishing all such agreements and related documents with the DSIR during the year under assessment, based on which, the DSIR has granted approval of extension to the assessee company for a further period of 3 years i.e. for A.Y. 2010-11, 2011-12 and 2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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