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Re: Disa llowan ce of Dedu ctio n u nder section 35(2 AB) a moun tin g to Rs. 12 ,01 ,4 2 ,780/-

5 . Tha t th e a ssessing o fficer erred on fa cts an d in law in allowing weigh ted d eductio n under sectio n 35(2 AB) o f th e Act a t Rs.1 00 ,90,68,000 a s aga in st Rs.1 12 ,9 2,10 ,780 cla imed b y th e app ella nt to wa rds exp en diture in cu rred on scien tific resea rch.

5 .1 Tha t th e assessing o fficer fa iled to ap p recia te tha t th e ap p ellan t ha vin g app ro ved R&D Centres and h a ving fu lfilled th e co nditio n s o f sectio n 35 (2 AB) o f the Act, is en titled to weig hted d edu ctio n in resp ect of th e en tire g ross exp enditure in cu rred on scienti fic resea rch .

3. The assessee has also moved an application under Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 dated 08.02.2024 seeking admission of additional ground which read as under:

"" Re: Disa llo wance of Dedu ctio n und er sectio n 35(2 AB) a mounting to Rs 12 ,01,42 ,780 5 . Tha t th e assessin g o fficer erred o n fa cts a nd in la w in allowing weig h ted d eduction und er sectio n 35(2 AB) of th e Act at Rs.1 0 0 ,9 0,68,000 a s against Rs.1 12 ,92 ,10 ,7 80 cla imed b y th e app ella n t to wards exp en d itu re incurred on scien tific research .
5 .3 Tha t th e assessing o fficer erred o n fa cts a n d in law in no t ap precia ting th a t th ere is n o p ro visio n und er th e Act empowering DS IR to ap pro ve the q uantum o f exp en d itu re fo r the p u rpo ses o f cla iming d ed u ctio n und er sectio n 35 (2 AB) o f th e Act.
5 .4 Tha t th e assessing o fficer erred o n fa cts a n d in law in no t ap precia ting tha t th e on ly requ iremen t fo r claimin g d edu ctio n under sectio n 35 (2 AB) o f th e Act is th at the in -house Research and Developmen t fa cility is to b e a pp roved b y DSIR an d no t fo r app ro va l o f expenses."

8.4 The TPO thus concluded that the assessee has unjustifiably claimed higher deduction under Section 80IC/80IE quantified at Rs. 64,34,78,261/- and proceeded to make adjustment under s. 80IA(10) of the Act.

9. Pursuant to the order of the TPO, the AO forwarded a draft of the proposed order of the assessment to the assessee proposing inter alia following adjustments.

Details o f Tra n sa ctio n Amoun t (in Rs.) TP a d ju stmen ts w.r.t. sp ecified do mestic tra n sa ctio n Adju stmen t u/s 9 2CA(3)/80 IA(10)/8 01C/80 IE o f the Act 64 ,34 ,7 8 ,261 Ageing o f Receiva b les 5 ,72 ,61 9 Oth er add itio n s/d isallo wan ces Add itio n w.r.t. to expend itu re in cu rred on in -hou se 12 ,01 ,4 2 ,780 scien tific resea rch u nder sectio n 35(2 AB) o f the Act Disa llo wan ce w.r.t. d ed u ctio n cla imed und er sectio n 63 8 ,13 ,601 80 G o f th e Act on a ccou n t o f dona tio ns g iven Add itio n w.r.t. d ifferen ce in Du ty Dra wba ck 2 ,18 ,48 1