“Section 2(1)(r)”
The decision most relied on for Section 2(1)(r) is CIT v. Claris Lifesciences Ltd. (326 ITR 251), cited in 196 judgments on BharatTax.
Leading authorities on Section 2(1)(r)
If approval from the Department of Scientific and Industrial Research (DSIR) for an in-house R&D centre is granted during the previous year, the assessee is entitled to claim weighted deduction under section 35(2AB) for the entire expenditure incurred during that year.
If an assessee possesses interest-free funds exceeding investments in tax-free securities, it is presumed that investments are made from these own funds, precluding disallowance of interest expenditure under Section 14A read with Rule 8D(2)(ii). Additionally, weighted deduction under Section 35(2AB) is computed on the gross expenditure incurred, not net expenditure after reducing income earned.
For claiming weighted deduction under section 35(2AB), the existence of recognition for a Research and Development (R&D) Centre is relevant, not necessarily the date of approval or recognition.
Section 35(2AB), an incentive provision, allows weighted deduction for expenditure 'on in-house research or development facility' even if related activities like clinical trials are conducted externally, provided they are for the in-house research. This requires a liberal interpretation of the provision.
The amounts received by an assessee, when regarded as capital receipts, do not fall within the definition of "income" under Section 2(24) of the Income Tax Act and are thus not chargeable to tax, unless specifically included by a statutory provision.
Expenditure incurred on an independent research centre and R&D unit is eligible for deduction under Section 35(1)(iv) of the Income Tax Act, and such expenditure need not be reduced from profits.
The case addresses the taxability of cash withdrawn from sub-contractors' bank accounts by employees of a civil contractor engaged in infrastructure development. The revenue observed these withdrawals during search proceedings, indicating potential issues with the assessee's tax compliance.
Revision under Section 263 is not justified in the absence of a finding by the Commissioner that there is a loss of revenue to the State.
