TMI Blog1993 (10) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... ss carried on by it within the meaning of section 35(1)(iv) of the Income-tax Act, 1961 ?" The assessee is a company. The business of the assessee is that of manufacturing pharmaceutical dye-stuffs and pesticides. In its return of income under the Income-tax Act, 1961 ("the Act"), for the assessment year 1975-76, the assessee claimed deduction under section 35(1)(iv) of the Act of a sum of Rs. 26,984 expended by it on the construction of approach road to the premises of its research and development laboratories. This claim was disallowed by the Income-tax Officer. The assessee appealed to the Commissioner of Income-tax (Appeals). The Commissioner of Income tax (Appeals) also rejected the claim of the assessee and upheld the order of the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on scientific research related to the business; Explanation . . . . . . (b) any sum paid to a scientific research association which has as its object the undertaking of scientific research or to a university, college or other institution to be used for scientific research Provided that such association, university, college or institution is for the time being approved for the purposes of this clause by the prescribed authority ; (iii) any sum paid to a university, college or other institution to be used for research in social science or statistical research related to the class of business carried on, being a university, college or institution which is for the time being approved for the purposes of this clause by the prescribed au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the road in question was not used exclusively for research purposes. The above findings of the Incometax officer and the Appellate Assistant Commissioner did not find favour with the Tribunal. The Tribunal accepted the contention of the assessee that the road in question being an approach road to the research and development laboratories, it was an expenditure of capital nature on scientific research within the meaning of clause (iv) of section 35(1) of the Act and held that the assessee was entitled to deduction under section 35(1) in respect thereof. It is this finding of the Tribunal which is challenged by the Revenue in this reference. Mr. G. S. Jetly, learned counsel for the Revenue, submits that the assessee is not entitled to d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poses. There is no dispute in this case that the road in question is an approach road to the research laboratories of the assessee. It is, therefore, at par with the buildings of the research laboratories and expenditure incurred thereon is eligible for deduction under section 35(1)(iv). The main purpose of this expenditure being to provide an approach road to the research laboratories, the fact that it may be used for other purposes also is not material. As observed by the House of Lords in Usher's Wiltshire Brewery Ltd. v. Bruce [1914] 6 TC 399, where the whole and exclusive purpose of the expenditure is for the purposes of the expender's trade, and the object which the expenditure serves is the same, the mere fact that, to some extent, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e other hand, makes it clear that, prior to its incorporation even expenditure incurred on acquisition of land was an allowable deduction under section 35(1)(iv) of the Act. In view of the foregoing discussion, we are of the clear opinion that the expenditure incurred by the assessee on construction of the approach road to its research and development laboratories is an expenditure of capital nature on scientific research related to the business of the assessee within the meaning of clause (iv) of section 35(1) of the Act, and the assessee is entitled to deduction under section 55 of the Act in respect thereof. The question referred to us is, therefore, answered in the affirmative, i.e., in favour of the assessee and against the Revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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