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TMI Blog2014 (1) TMI 1306X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Act, 1961 ('the Act' hereinafter) for the said years. 2.1 At the very outset, it was observed that the assessee's appeal for A.Y. 2007-08 is delayed by a period of 112 days; having been filed on 03.01.2012, while the date of communication of the order appealed against is 15.07.2011. The condonation petition is on record, which is accompanied by separate Affidavits by the Managing Director, Shri Ambrish Vijay Shah; Shri R.A. Jagtap, the instructing Chartered Accountant, and Shri Mithileshkumar Rajdev Singh, an employee of the said tax consultant, to the same effect, state that the impugned order, on being received was duly forwarded to the counsel, who prepared the appeal in time, which was sent for the signature of the appeal papers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are being disposed of vide a common, consolidated order. For the sake of convenience, the reference to the facts/figures would be for that A.Y. 2007- 08, the first of the two years. 4.1 Opening the arguments for and on behalf of the assessee, it was submitted by the ld. AR, it's counsel, that the only issue under appeal relates to the disallowance of expenditure on research and development incurred in the sum of Rs.570.95 lacs. The assessee incurred the said expenditure in the sum of Rs.898.37 lacs, claiming 100% deprecation thereon. The A.O. was, however, of the view that the same resulted in an intangible asset, which qualifies for deprecation @ 25% u/s.32 of the Act. The assessee's contention of the said expenditure being allowable in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The same would signify of it being capital in nature, even as considered by the assessee and, further, for its business. In fact, we observe no dispute in this regard; the Revenue having itself allowed depreciation on the same. The same would thus be eligible for deduction in full u/s. 35(1)(iv), which allows for the same where capital expenditure on scientific research is incurred in respect of the assessee's business. This is as the twin conditions to which a claim under the said provision is subject to, i.e., as specified u/s. 35(2), stand apparently fulfilled; the expenditure being admittedly incurred after 31.03.1967 and, two, does not include any expenditure on land, as again evident from the fact of allowance of depreciation thereon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Coming to the assessment for AY 2006-07, the fact that the tribunal allowed the assessee's claim u/s.37(1) would, therefore, only imply that the said expenditure is not qua scientific expenditure, whether in the revenue or in the capital field, and which is admittedly not the case of either party before us. That is, the expenditure being admittedly on scientific research, there is no basis for not allowing the claim u/s. 35(1), only whereupon, i.e., on a finding of it not falling or being covered u/s. 35, could the scope of the same falling u/s.37(1) be considered. Further, both the parties have regarded the same as capital expenditure. We, therefore, notwithstanding the fact that the assessee stands allowed deduction qua the said expend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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