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2016 (1) TMI 38 - ITAT CHENNAI

2016 (1) TMI 38 - ITAT CHENNAI - TMI - Deduction u/s 35(2AB) denied - Held that:- Since the approval as required u/s 35(2AB) of the Act r.w.rule 6 was not obtained from the prescribed authority, this Tribunal is of the considered opinion that the assessee is not entitled for any deduction u/s 35(2AB) of the Act. Therefore, this Tribunal do not find any infirmity in the order of the CIT(A) and accordingly the same is confirmed. - Decided against assessee. - I.T.A.No.1982/Mds/2013 - Dated:- 13-11- .....

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ction u/s 35(2AB) of the Act to the extent of ₹ 1,25,32,197/-. According to the ld. Representative, the assessee owns an in-house Research & Development Facility. Referring to the assessment order, the ld. Representative submitted that the Assessing Officer rejected the claim of the assessee on the ground that the assessee has not obtained the approval of the prescribed authority, i.e Department of Scientific & Industrial Research (DSIR) as required u/s 35(2AB) of the Act. Referrin .....

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ied for the first time. The Department further clarified that the claim of the assessee with regard to expenditure incurred on Research & Development facility before 1.4.2007 i.e before the date of filing of application for approval, cannot be considered for issue of Form 3CL as required u/s 35(2AB) of the Act. Referring to page 94 of the paper book, the ld. Representative submitted that DSIR renewed the recognition for inhouse Research & Development facility beyond 31.3.2003. In fact, t .....

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t obtained any approval as required u/s 35(2AB) of the Act from the prescribed authority. The Hyderabad Bench found that the assessee cannot be denied deduction claimed u/s 35(2AB) of the Act merely on the ground that the prescribed authority has not submitted report in Form 3CL. On a query from the Bench for the purpose of claiming deduction u/s 35(2AB) of the Act, the assessee has to obtain approval in Form 3CM from the Secretary to the Government of India, Department of Scientific & Indus .....

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nts P. Ltd in I.T.A.No. 4246/Mum/2009, dated 20.8.2010, a copy of which is placed at page 114 of the paper book, the assessee is eligible for deduction u/s 35(2AB) of the Act. 3. On the contrary, Dr. B. Nischal, Ld. Departmental Representative submitted that the prescribed authority for granting approval u/s 35(2AB) of the Act is Secretary to Government of India, Department of Scientific & Industrial Research. Referring to Rule 6 of the Income-tax Rules, 1962, the ld. DR pointed out that the .....

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al of the Secretary to the Government of India, Department of Scientific & Industrial Research is a pre-condition. In the absence of any such approval as required in Rule 6(5A) r.w.s 35(2AB) of the Act, according to the ld. DR, the assessee is not eligible for deduction u/s 35(2AB) of the Act. 4. We have considered the rival submissions on either side and also perused the material available on record. We have also carefully gone through the provisions of sec. 35(2AB) of the Act which reads a .....

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penditure 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 two times of the expenditure so incurred. 5. In view of the above provision, approval of the prescribed authority is a mandatory pre-condition for claiming deduction u/s 35(2AB) of the Act. Rule 6 clearly says that the prescribed authority is Secretar .....

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of the approval said to be granted by Government of India upto 31.3.2006 which was further extended upto 31.3.2009. This is a letter received from Scientist F attached with Ministry of Science & Technology. This letter does not refer any provisions of the Income-tax Act, 1961. Rule 6 of the Income-tax Rules clearly says that in case of a national laboratory or a university the specified persons authorized to grant approval is the Principal Scientific Adviser to the Government of India. Howe .....

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he Secretary to the Government of India. Form 3CM clearly indicates that the approval has to be signed by the Secretary to Government of India, Department of Scientific & Industrial Research. The power was not delegated to any other authority in the Department to issue the certificate. However, in respect of claiming deduction u/s 35(2AA) after the approval was granted by the Principal Scientific Adviser to Government of India, the authorization can be issued by an Officer not below the lank .....

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very fairly that no approval u/s 35(2AB) of the Act was obtained in Form 3CM as required under rule 6(5A) of the Income-tax Rules. 8. We have gone through the decision of the Hyderabad Bench of this Tribunal in M/s Sri Biotech Laboratories India Ltd.(supra). The scientific research facility was approved by DSIR till 31.3.2015. However, the certification of expenditure incurred by the assessee was not issued in Form 3CL. Therefore, the Hyderabad Bench found that merely because Form 3CL was not is .....

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