INCOME TAX ACT, 1961

Section 263 Section 35(2AB)

Revision under section 263 - Erroneous and prejudicial order - Allowance of weighted deduction under section 35(2AB) pending approval of expenditure in Form 3CL -

Pr.CIT held order passed by AO as erroneous and prejudicial to the interest of revenue on the ground of AO having allowed weighted deduction under section 35(2AB). Awaiting approval and certification by Department of Scientific and Industrial Research (DSR) in Form 3CL. Held: Prior to 1-7-2016, Form 3CL had no legal sanctity and it was only with effect from 1-7-2016 with the amendment to rule 6(7A)(b), that quantification of weighted deduction under section 35(2AB) has significance. In assessee's case there was no difficulty about quantum of deduction under section 35(2AB). The other condition required to be fulfilled for claiming deduction under section 35(2AB) is that research and development facility should be approved by the prescribed authority. The prescribed authority is the Secretary, Department of Scientific Industrial Research, Govt. of India (DSIR). It was not in dispute that assessee obtained approval in Form No. 3CM as required by rule 6 (5A). In these facts and circumstances, deduction under section 35(2AB) ought to have been allowed as weighted deduction at 200% of the expenditure as claimed by assessee and AO having followed one of the possible views, assessment order could not be turned as erroneous and prejudicial.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2015-16

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