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TMI Blog2016 (4) TMI 1294X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 (hereinafter referred to as the Act) for approval of the in-house research and development facility and also to approve the expenditure incurred by the petitioner company for such research and development work on the basis of which the petitioner company would be entitled to claim the weighted deduction at the specified rate against its income for the relevant year under the aforesaid provisions of the Act. 2. Though the research and development facility were duly approved by the 1st respondent, Mr R. R. Abhyankar, Scientist G for and on behalf of the Secretary Department of Scientific & Industrial Research (DSIR), Ministry of Science and Technology, Government of India, New Delhi vide Annexure A dated 13.8.2009, but in the prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity to reconsider the approval for the reduced amount under the order impugned and to revise the same upwardly on the basis of the amount of R & D expenditure actually incurred by them. Since such revision of the amount was not made by the respondent authority, the petitioner company has filed the present writ petition before this Court. 4. Mr. K P Kumar, learned Senior counsel for the petitioner assessee urged that the determination of the amount of R & D expenditure by the 1st respondent was done in the impugned order - Annexure C dated 20.1.2014 without giving any prior show cause notice to the petitioner assessee and also without giving an opportunity of hearing to the petitioner assessee and secondly, the alleged reasons, as orally i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said company, cannot be held to be a part of the R & D expenses and therefore, the assessee would not be entitled to deduction under S.35 (2AB) of the Act of the said expenditure and thus, the impugned order deserves to be sustained. 6. I have heard the learned counsel for the parties at some length and perused the record. 7. The provisions of S.35(2AB) which provides for a weighted deduction under Chapter IV of the Income Tax Act, 1961 in respect of 'Expenditure on Scientific Research' to promote such research by the industry is reproduced below for ready reference. "S:35(2AB) (1) Where a company engaged in the business of biotechnology or in any business of manufacture or production of any article or thing, not being an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount approved is somewhat less than the amount of expenditure claimed by it and thus tallying the same with its claim, the assessee made a representation vide Annexure F dated 4.3.2015. The two reasons for the reduction of the said amount were as indicated above namely, the cost of motor vehicles purchased for testing the parts and the salary and wages paid to the trainees and apprentices. 10. Chapter IV of the Income Tax Act deals with computation of income under the provisions of the Income Tax Act, 1961 and Part D relates to 'Profits and gains of business or profession'. In that Part D of Chapter IV, S.35 provides for 'Expenditure on Scientific Research' and S.35 (2AB) gives a weighted deduction of the amount of exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich, the said respondent Secretary passed the impugned order approving the expenditure for scientific research as required under the provisions of S.35 (2AB) of the Act at a reduced level. Had such a notice been given by the said authority to the assessee company, perhaps the assessee company could have satisfied the said authority about the genuineness of the claim and rational nexus of these expenses relatable to the scientific research undertaken by it entitling it for claiming the weighted deduction in respect of these expenses also under the category of approved expenditure for scientific research under S.35(2AB) of the Act. 12. The impugned order is thus clearly hit by the vice of non-compliance of the principles of natural justice o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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