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2014 (9) TMI 510 - AT - Income TaxClaim of deduction u/s 35(2)(AB) Weighted deduction under R&D expenses Held that:- Approval of DSIR as contemplated is only in respect of weighted deduction to be claimed u/s 35(2AB) of the Act - no material has been brought on record by the department to controvert assessee's claim that it has incurred towards salary and wages of employees engaged in revenue expenditure, R&D and capital expenditure on R&D activities - unapproved revenue expenditure if not allowable u/s 35(2AB) of the Act, in absence of approval from DSIR, certainly can be allowed as deduction u/s 35(1)(i) and 37(1) of the Act as the case may be revenue not disputed the fact that expenditure incurred was towards salary and wages - the expenditure is allowable u/s 35(1)(i) or u/s 37(1). So far as disallowance of capital expenditure is concerned, no material has been brought on record by the department to controvert assessee's claim that such expenditure incurred was towards scientific research - Disallowance was only for the reason that it is not approved by DSIR - even in absence of approval from DSIR though assessee may not be eligible for deduction u/s 35(2AB), still assessee can claim the deduction u/s 35(1)(iv) relying upon Tube Investments of India Ltd. Vs. CIT [2002 (9) TMI 45 - MADRAS High Court] - assessee is eligible for deduction in respect of revenue expenditure and capital expenditure Decided in favour of assessee. Disallowance made u/s 14A read with Rule 8D Held that:- It is the contention of the assessee that the investment in Godavari Fertilizers Ltd. has to be excluded as the company has merged with the assessee in pursuance to scheme of amalgamation approved by the AP High court - So far as interest expenditure is concerned, as per the details furnished by assessee, total disallowance on account of investments made out of borrowed fund has been worked out - all these facts were available before the departmental authorities, as it appears, they have not properly applied their mind to these factual issues thus, the matter is remitted back to the AO for fresh adjudication Decided in favour of assessee.
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