Law:

Section:

SECTION 35(1)(iii ) OF THE INCOME-TAX ACT, 1961 - EXPENDITURE ON SCIENTIFIC RESEARCH - WHETHER ASSESSES IS ENTITLED TO DEDUCTION OF AMOUNT PAID BY IT AS RENT ON BEHALF OF RESEARCH INSTITUTION - HELD, YES Facts The assessee claimed deduction under section 35(1)(iii ) of the amount paid by it as rent on behalf of a certain institution engaged in research work. However, the Tribunal allowed the assessee's contention. On reference, the revenue, however, contended that in order to be deductible under section 35(1)(iii) the sum in question must be paid to the concerned institution to be used for research whereas in the instant case, the payment was not made to the institution. Held There is no difference between the payment made directly to the institution or indirectly to a creditor of the institution. In each case, the payment results in a credit to the institution concerned. The fact that in the instant case payment was made for rent and not research, did not change the condition. An institution concerned with research has to have a building and has to incur expenditure in retaining that building. So, any payments made towards the rent would be payments towards the research. Further, to the extent the rent was paid, additional funds would be available to the institution for carrying on research. Therefore, the assessee's claim for deduction was rightly allowed by the Tribunal. SECTION 2(7)(d) OF THE FINANCE (NO. 2) ACT, 1967-INDUSTRIAL COMPANY-ASSESSEE-COMPANY DERIVED ATLEAST 51 PER CENT OF ITS INCOME FROM A PARTNERSHIP WHICH WAS CONCERNED WITH MANUFACTURE OF WIRES-WHETHER ASSESSEE COULD BE TREATED AS AN INDUSTRIAL COMPANY NOTWITHSTANDING THAT SUCH 51 PER CENT INCOME WAS DERIVED FROM PARTNERSHIP-HELD, YES Facts The Tribunal allowed the assessee's claim that it was an industrial company oh the ground that at least 51 per cent of the assessee's income was from the partnership which was concerned with the manufacture of super-enamelled copper wire. On reference : Held A company is deemed to be an 'industrial company' if its income from manufacture is more than 50 per cent. In the instant case, the finding was that 51 per cent of the assessee's income came from…

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