TMI Blog2015 (9) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... etention in case of pendency of license approval application. We find that such procedures sometimes take years to complete. One of such an instance placed on record reveals that the assessee completed research study in March 2011, its client applied for drug license in USA and the said authority inspected its premises storing samples in question in May 2014. This letter issued by Department of Health and Human Services, Public Health Service, Food & Drug Administration, Silver Suffering, MD 20993 to this effect is dated 01.07.2015. The Revenue fails to rebut this factual position. The case file further reveals that the assessee’s clients have to exercise an option of discarding, returning and retention of samples in lieu of paying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction, in proceedings u/s. 143(3) of the Income Tax Act, 1961 (in short the Act ). 2. Both parties state at the outset that the sole issue involved in these two appeals is that of Section 80IB(8A) deduction i.e. whether the assessee s sample storage incomes hereinabove are to be held as derived from the eligible business for granting the impugned deduction or not. We take up ITA No. 2431/Ahd/2012 as the lead case. 3. The Assessing Officer in the course of scrutiny noticed assessee s sample storage income of ₹ 13,45,928/- in its P L account included for claiming Section 80IB(8A) deduction. The assessee is already an approved research and development company from the competent authority in the impugned assessment year. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income being integral part of scientific research. Assessing Officer disallowed the claim of deduction on sample storage income on the ground that this activity is not integral part of scientific research and that this income was separately shown in P L account. It is not in dispute that appellant is approved as R D company under section 80 IB (8A) by DSIR, government of India. Accordingly, appellant is entitled to deduction in respect of profits and gains of business of scientific research and development. Profit in respect of any activity which is integral and part of scientific research and development is eligible for deduction under section 80IB(8A). Appellant submitted that scientific research and development work undertaken by it invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod for which samples were preserved. In view of this, the charges for sample storage could not have been clubbed with bioequivalence or bio availability study income. Since the appellant was not providing the storage facility to anyone other than those for whom it conducted necessary study and it was not preserving the samples which were not used by it in its study, the sample storage cannot be treated an independent business outside its business of scientific research and development. Since the sample storage income is generated from the agreement for scientific research and development, the said profit is eligible for deduction under section 80IB(8A). In view of this, just by mentioning the sample storage income separately in P L account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of clinical samples. This agreement contains a specific clause for samples retention in case of pendency of license approval application. We find that such procedures sometimes take years to complete. One of such an instance placed on record reveals that the assessee completed research study in March 2011, its client applied for drug license in USA and the said authority inspected its premises storing samples in question in May 2014. This letter issued by Department of Health and Human Services, Public Health Service, Food Drug Administration, Silver Suffering, MD 20993 to this effect is dated 01.07.2015. The Revenue fails to rebut this factual position. The case file further reveals that the assessee s clients have to exercise an opt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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