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2023 (1) TMI 860 - AT - Income TaxWeighted deduction u/s 35(2AB) - absence of requisite approval u/s 35(2AB) - As per AO recognition of R&D facilities is different from the requisite approval as envisaged u/s 35(2AB) - whether the respondent-assessee is entitled for deduction u/s 35(2AB) of the Act in respect of expenditure incurred on R&D under the provisions of section 35(2AB) of the Act or not? - HELD THAT:- Material on record clearly indicates that there was no requisite approval as envisaged u/s 35(2AB), which is condition precedent for availing the benefit of deduction u/s 35(2AB) of the Act. It is also settled principle of construction while construing the provisions of exemption, the provisions should be construed strictly as laid down by the Constitution Bench of the Hon’ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs Dilip Kumar & Company & Others [2018 (7) TMI 1826 - SUPREME COURT] CIT(A) had fell in serious error in allowing the deduction u/s 35(2AB) in the absence of requisite approval u/s 35(2AB) of the Act. The ld. CIT(A) lost sight of the fact that the recognition of R&D facilities is separate and distinct from approval of R&D facilities for the purpose of deduction u/s 35(2AB) of the Act. Therefore, the order of the ld. CIT(A) is perverse and passed in perfunctory manner. In the circumstances, we set-aside the order of the ld. CIT(A) and restore the order of the Assessing Officer. Thus, the ground of appeal filed by the Revenue stands allowed.
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