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2019 (11) TMI 639 - AT - Income TaxRevision u/s 263 - assessee’s claim of deduction u/s. 35(2AB) - view of CIT that while computing deduction u/s. 35(2AB) of the act, assessee should have reduced the contract Research & Development income instead of contract Research & Development expenditure - HELD THAT:- While replying to this particular aspect raised by CIT in the show cause notice, assessee had specifically submitted that provision of section 35(2AB) speaks of Research & Development expenditure and not income. To support such contention, the assessee has also cited the decision of the Tribunal in the case of ACIT vs. Wockhardt Ltd [2012 (5) TMI 823 - ITAT MUMBAI] CIT has not countered the specific submissions of the assessee on this issue. Even, she has not denied the fact that as per the decision of the Tribunal in the case of ACIT vs. Wockhardt Ltd [2012 (5) TMI 823 - ITAT MUMBAI], only Research & Development expenditure has to be reduced and not the income. By merely stating that the department has contested the decision of the Tribunal in the case of ACIT vs. Wockhardt Ltd (supra) by filing a reference in the Hon’ble Bombay High Court, she has directed the Assessing Officer to net off the contract Research & Development income in place of Research & Development expenditure. In the aforestated premises, in our view, assessment order passed cannot be held to be erroneous and prejudicial to the interest of the Revenue when the deduction claimed u/s. 35(2AB) of the Act is not only in conformity with the statutory provisions but also in consonance with the decision of the Tribunal on the issue. In view of the aforesaid, we hold that the exercise of power u/s. 263 of the Act in the instant case is invalid hence, unsustainable. Accordingly, we set aside the impugned order of learned CIT passed u/s. 263 of the Act and restore the assessment order. The grounds are allowed.
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