#weighted deduction

The ITAT Kolkata has ruled that a taxpayer claiming weighted deduction under Section 35(1)(ii) for scientific research may offset the full Rs. 1.57 crore claim against income from other sources if business income is inadequate to absorb the deduction. This clarifies that the deduction is not capped by business profits, significantly benefiting R&D investors with diversified income streams and aligning with the legislative intent to incentivize innovation.

The ITAT Ahmedabad has ruled that companies claiming weighted deduction under Section 35(2AB) may compute the deduction on gross scientific research expenditure, without reducing it by income earned from contract research. This clarifies a long-standing ambiguity and benefits pharmaceutical and tech firms that outsource R&D, ensuring they receive full incentive for domestic innovation spending.

ITAT Delhi rules that R&D expenditure rejected under Section 35(2AB) for lack of certification can still be claimed as a business expense under Section 37(1) if its genuineness is established. This holding preserves tax relief for businesses incurring legitimate R&D costs even when formal compliance fails.