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2021 (8) TMI 231 - AT - Income TaxExpenses under the head research and development - deduction of such expenses under the provisions of section 37(1) OR u/s 35 - whether the assessee has incurred the impugned expenses wholly and exclusively for the purpose of the business as mandated under the provisions of section 37? - HELD THAT:- In the case on hand the assessee is harping upon that the expenses in question are genuine as admitted by the Revenue and therefore the same should be allowed as deduction. CIT (A) has given very clear-cut finding that the expenses in dispute have been incurred by the assessee but its outcome has been used by the group as a whole. Thus, the assessee has not availed the benefit of the impugned expenses in entirety and therefore the entire expenses cannot be allowed as deduction while computing the income of the assessee. Accordingly, the learned CIT (A) has allowed the relief to the assessee to the tune of 50% of the total expenses incurred under the head research and development activities. The provisions of section 37(1) of the Act mandates that the assessee can claim the deduction if the expenses have been incurred wholly and exclusively for the purpose of the business. In the event the conditions stipulated under the provisions of section 37(1) of the Act are not complied with, then the assessee cannot claim the deduction under the section. The finding of the learned CIT (A) has not been controverted by the learned AR at the time of hearing and therefore the genuineness of the expenses cannot be a criteria for allowing the deduction under section 37(1) of the Act in the given facts and circumstances. R & D facility was not exclusively used by the assessee for its own activities. Thus, we do not find any merit in the argument advanced by the learned AR for the assessee. Hence we concur with the finding of the authorities below. Thus the ground of appeal of the assessee is dismissed.
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