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TMI Blog2012 (8) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner was not adversely affected in the sense that the tax concession benefit admissible to it was not withdrawn up to 1996, the petitioner's position as Scientific Research Institution continued. It was sought to be treated as Scientific Research Association. This was, however, contested and the Appellate Tribunal ultimately ruled in favour of the petitioner which become conclusive. 3. The petitioner's representation for grant of approval in terms of Section 35(1)(ii), made on 22nd August, 2008 remained pending; in the meanwhile an amendment was made to its object clause. On 24th September, 2010, first respondent rejected the application holding that the approval could not be given since the conditions prescribed under the provision were not satisfied. The petitioner felt aggrieved and approached this Court by filing W.P.(C) 7518/2010 impugning the said rejection order dated 24th September, 2010. 4. This Court by order dated 9th August, 2011 allowed the writ petition. The Division Bench observed and directed as follows: "4. To appreciate the aforesaid rivalised submissions at the Bar, we have carefully scrutinized the order dated 24th September, 2010, which has been impug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecognized as Scientific and Industrial Research Organisation by the Government of India, Ministry of Science and Technology, Department of Scientific and Industrial Research, New Delhi. The letter issued by the Ministry of Science and Technology, Government of India is attached herewith for your kind reference and record. Annexure-1 6. That in the case of Indian Planetary Society v. CBDT (2009) 318 ITR 102 (Bom.) the Hon'ble High Court, while considering the aspect of the matter regarding application under Section 35(1)(ii), held as under:- "CBDT by its very nature is composed of the officers from Income Tax Department. By their very nature though they may read and consider some aspects, will really not be in the position to arrive at the finding as to whether the activities carried on by bodies like the petitioner amount to research as may be required. In our opinion therefore, the Central Government which has the authority, before considering the application of a body like the petitioner, ought to bear this in mind." 6. By the impugned order, the Central Board of Direct Taxes denied the approval. Learned Sr.Counsel, Mr.M.S.Sayali, appeared on behalf of the petitioner and conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gazette; (iii) Any sum paid to a university, college or other institution to be used for research in social science or statistical research : Provided that such university, college or institution is for the time being approved for the purposes of this clause by the prescribed authority by notification in the Official Gazette; (iv) In respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub-section (2) : Provided that the scientific research association, university, college or other institution referred to in clause (ii) or clause (iii) shall make an application in the prescribed form and manner to the prescribed authority for the purpose of grant of approval, or continuance thereof, under clause (ii) or, as the case may be, clause (iii) : Provided further that the prescribed authority may, before granting approval under clause (ii) or clause (iii), call for such documents (including audited annual accounts) or information from the scientific research association, university, college or other institution as it thinks necessary in order to satisfy itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an asset representing expenditure of a capital nature incurred before the 1st day of April, 1967, ceases to be used in a previous year for scientific research related to the business and the value of the asset at the time of the cessation, together with the aggregate of deductions already allowed under clause (i) falls short of the said expenditure, then - (a) There shall be allowed a deduction for that previous year of an amount equal to such deficiency, and (b) no deduction shall be allowed under that clause for that previous year or for any subsequent previous year; (iii) If the asset mentioned in clause (ii) is sold, without having been used for other purposes, in the year of cessation, the sale price shall be taken to be the value of the asset at the time of the cessation; and if the asset is sold, without having been used for other purposes, in a previous year subsequent to the year of cessation, and the sale price falls short of the value of the asset taken into account at the time of cessation, an amount equal to the deficiency shall be allowed as a deduction for the previous year in which the sale took place; (iv) Where a deduction is allowed for any previous year under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Indian Council of Medical Research, the Council of Scientific and Industrial Research, the Defence Research and Development Organisation, the Department of Electronics, the Department of Bio-Technology or the Department of Atomic Energy and which is approved as a National Laboratory by the prescribed authority in such manner as may be prescribed; (b) "University" shall have the same meaning as in Explanation to clause (ix) of section 47; (c) "Indian Institute of Technology" shall have the same meaning as that of "Institute" in clause (g) of section 3 of the Institutes of Technology Act, 1961 (59 of 1961). (2AB)(1) Where a company engaged in the business of manufacture or production of any drugs, pharmaceuticals, electronic equipment, computers, telecommunication equipment, chemicals or any other article or thing notified by the Board incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building) on in house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to one and one-fourth times of the expenditure so incurred. (2) No deduction shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion arises under this section as to whether, and if so, to what extent, any activity constitutes or constituted, or any asset is or was being used for, scientific research, the Board shall refer the question to the prescribed authority, whose decision shall be final." 9. The writ petitioner relied upon the decision of the Bombay High Court in the case of Indian Planetary Society v. CBDT (2009) 318 ITR 102. It had relied upon the decision in the representation made to the CBDT, after the order dated 9th August, 2011 in the earlier writ petition. The ruling of the Bombay High Court Division Bench is categorical as it says that the CBDT has the power to make a reference to the Central Govt. which alone has the jurisdiction to decide the question in terms of Section 35(3) of the Income Tax Act and the governing Rules. The CBDT could not be unaware of the legal position having regard to the mandate of Section 35; this Court is of the opinion that the assumption of jurisdiction by CBDT to decide the matter itself is without authority of law. The direction of the Court had to be construed within the frame work of law and the CBDT could only refer the matter to the Central Govt., but no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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