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2018 (10) TMI 1713 - AT - Income TaxDisallowance u/s 35(1)(i) - HELD THAT:- First reason for disallowing the claim of deduction is that research work was carried out by Mother Diary Foods Processing Ltd, Delhi and not by assessee and later on, part of costs were recovered from the assessee company. The Revenue alleges that the assessee itself had not carried out R & D activities. Thus the correlation of expenses incurred with the business of the assessee could not be established which is primarily required for allowance of deduction u/s 35(1)(i) of the Act. Answer to this quarrel is in the decision of the Hon'ble High Court of Bombay in the case of National Rayon Corporation Limited [1981 (8) TMI 24 - BOMBAY HIGH COURT] has held that for claiming the deduction u/s 35(1)(i) of the Act, research must have been carried on by the assessee itself is not borne out by phraseology of the statutory provision. The assessee can claim the deduction even if the research is carried on by some other person on behalf of the assessee. Contribution by the assessee to Delhi University and Nagpur University - HELD THAT:- AO was of the opinion that u/s 35(1)(ii) of the Act, the deduction of any sum paid to scientific research association is allowable if such association’s object is undertaking of scientific research or to a university, college or other institution to be used for scientific research subject to fulfilment of certain conditions. AO was of the opinion that though the assessee has furnished proof of approval under the I.T. Act, 1922, but has failed to produce any evidence under the provisions of ITAT Rules, 1962. We find that a similar dispute was considered by DHARA VEGETABLE OIL & FOODS CO LTD VERSUS DEPUTY COMMISSIONER OF INCOME TAX [2012 (7) TMI 593 - GUJARAT HIGH COURT] and at para 17 of its order the Hon'ble High Court has decided the issue in favour of the assessee and against the Revenue.
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