The Delhi High Court in the case of Maruti Suzuki India Ltd v. Union of India & Anr (W.P. (C) 9306/2015, dated 4 August 2017) held that Research & Development (R&D) expenditure acquired in earlier years is eligible for weighted deduction under Section 35(2AB) of the Income-tax Act, 1961 (the Act) even though the Department of Scientific and Industrial Research (DSIR) approved the R&D facility at a later date.
For use of the benefit under Section 35(2AB) of the Act what is relevant is not the date of recognition or the cut-off date mentioned in the certificate of the DSIR or even the date of approval but the existence of the recognition. An examination of Sections 35(2AB), 35A and 35AB of the Act indicates that the purpose behind these provisions is to provide an impetus for research and development of new technologies, obtaining patent rights, copyrights and know-how. The High Court observed that if an R&D centre is not recognised it is not entitled to a deduction, but if it is recognised, it is entitled to the benefit.
