Scientific Resarch

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Anuj Agarwal (Querist)
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29 June 2010 An asset purchased (suppose for Rs.10lacs) under section 35(2AB) i.e, scientific resarch. and is sold in the same PY for Rs.12 LAc

What will be the tax liability for the company?
Is it should get deduction of 150%
Kinddly bifurcate what amount shall to tocapiatal gain, business profit and amount of deduction

jegannath G

jegannath G (Expert)
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29 June 2010 The company should not claim any deduction under 35 (2AB) for the Assets pruchased for Scientific purpose.

The capital gain - is Rs 2 lacs

CA Shiv

CA Shiv (Expert)
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29 June 2010 Hello,
I think there is no deduction if it is incurred after 2005...

Section 35(2AB)

(1) Where a company engaged in the business of bio-technology or in the business of manufacture or production of any drugs, pharmaceuticals, electronic equipments, computers, telecommunication equipments, chemicals or any other article or thing notified by the Board incurs any expenditure on scientific research (not being expenditure in the nature of cost of any land or building ) on in-house research and development facility as approved by the prescribed authority, then, there shall be allowed a deduction of a sum equal to one and one-half times of the expenditure so incurred.

Explanation.-For the purposes of this clause, "expenditure on scientific research", in relation to drugs and pharmaceuticals, shall include expenditure incurred on clinical drug trial, obtaining approval from any regulatory authority under any Central, State or Provincial Act and filing an application for a patent under the Patents Act, 1970 (39 of 1970).

(2) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) under any other respect of the expenditure mentioned in clause (1) under any other provision of this Act.

(3) No company shall be entitled for deduction under clause (1) unless it enters into an agreement with the prescribed authority for co-operation in such research and development facility and for audit of the accounts maintained for that facility.

(4) The prescribed authority shall submit its report in relation to the approval of the said facility to the Director General in such form and within such time as may be prescribed.

(5) No deduction shall be allowed in respect of expenditure referred to in clause(1) which is incurred after the 31st day of March, 2005.

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