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The assessee has claimed weighted deduction for R&D expenditure under s. 35(2AB) of the Act, in respect of amount incurred for R&D. The AO has denied deduction claimed under s. 35(2AB) of the Act, on the ground that, although, the R&D facilities were recognized by the DSIR, but for the purpose of tax exemption it has to be approved by the competent authority i.e., The Secretary, Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. Since, the R&D facility has not been approved from the competent authority and necessary approval Form 3CM is not available for the impugned assessment year, he opined that weighted deduction claimed under s. 35(2AB) of the Act, is not available and accordingly, denied deduction claimed under s. 35(2AB) of the Act, by the assessee towards R&D expenditure.Aggrieved by the assessment order, the assessee has preferred an appeal before the learned CIT(A).

Shanti Prime Publication Pvt. Ltd.

Sec. 35(2AB) of Income-tax Act, 1961— Business expenditure—Once the facility has been approved by competent authority, then no cut-off date is prescribed for approval of such facility and the benefit of deduction under s. 35(2AB) should be given to the assessee as long as the recognition is in force.

Facts: Assessee has claimed weighted deduction for R&D expenditure under s. 35(2AB) in respect of amount incurred for R&D. AO denied deduction claimed under s. 35(2AB) on the ground that, although, the R&D facilities were recognized by the DSIR, but for the purpose of tax exemption it has to be approved by the competent authority i.e., The Secretary, Department of Scientific and Industrial Research, Ministry of Science and Technology, Government of India. Since, the R&D facility has not been approved from the competent authority and necessary approval Form 3CM is not available for the impugned assessment year, he opined that weighted deduction claimed under s. 35(2AB) is not available and denied deduction claimed under s. 35(2AB) by the assessee towards R&D expenditure.

Held, that the recognition was valid from 1st April, 2001, and which was available during this period. The application for approval in Form 3CK was filed as back as on 9th Jan., 2002. The assessee has claimed deduction under s. 35(2AB) right from asst. yr. 2001-02 to asst. yr. 2008-09 and such claim was accepted by the Department. Further, the facility was approved/recognized upto 31st March, 2016, vide communication dt. 15th Jan., 2014, and such approval was once again renewed upto 31st March, 2019. It is very clear that assessee's facility was approved by the competent authority i.e., the Secretary DSIR, but there was no approval in Form No. 3CM for the impugned assessment year. What is relevant to decide eligibility for weighted deduction under s. 35(2AB) is existence of R&D facility and recognition of such facility by the competent authority. Once the facility has been approved by the competent authority, then no cut-off date is prescribed for approval of such facility and the benefit of deduction under s. 35(2AB) should be given to the assessee as long as the recognition is in force. Hence, AO as well as CIT(A) were incorrect in denying the benefit of weighted deduction claimed under s. 35(2AB). Hence, we direct the AO to allow weighted deduction claimed under s. 35(2AB). In the result, appeal filed by the assessee is allowed. - ADVANCE ENZYME TECHNOLOGIES (P) LTD. V/s ASSTT. CIT - [2020] 205 TTJ 679 (ITAT-MUMBAI)