The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT), confirmed deduction under Section 35(2AB) of the Income Tax Act, 1961 on the ground that cut of date in certificate issued by Department of Scientific and Industrial Research (DSIR) has no relevance.
The assessee, M/s Rex-tone Industries Ltd has filed return of income declaring total income at Rupees seventy-four lakhs. The assessment u/s 143(3) of the Income Tax Act was also completed. The AO had disallowed the claim of deduction u/s 35(2AB) of the Income Tax Act on the ground that it had obtained certificate from the Ministry of Science and Technology as approval u/s 35(2AB) of the Income Tax Act which showed that the assessee was not entitled for claiming deduction for assessment year 2012-13 since the approval was obtained during the assessment year 2013-14.
Aggrieved, the assessee filed the appeal before the CIT(A). The CIT(A) has allowed the claim of deduction u/s 35(2AB) of the Income Tax Act after placing reliance on the decision of the High Court of Gujarat in the case of Clans Life Sciences Ltd.
During the course of assessment the assessee was asked to file the copy of approval given by the department of Scientific & Industrial Research u/s 35(2AB) of the Income Tax Act. The A.O noticed that approval was granted in the F.Y. 2012-13, therefore, he has disallowed the claim of deduction pertaining to the year under consideration stating that assessee was not entitled to claim deduction u/s 35(2ab) of the Act.
It is noticed that assessee has made application for approval to the Scientific department of the Government of India and later an approval was also granted. In this regard the CIT(A) has referred the decision of the Gujarat High Court in the case of CIT vs. Clans Life Science Ltd, wherein it is held that the cut of date mentioned in the certificate issued by the DSIR would be of no relevance.
A Coram consisting of Aby T Varkey, Judicial Member and Amarjit Singh, Accountant Member observed that “Taking into consideration the fact and findings of the CIT(A) we don’t find any infirmity in the decision of the CIT(A) in allowing the claim of deduction u/s 35(2AB).”
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