ITA 1961 · Section 35

Section 35 — Expenditure on Scientific Research

Chapter IV-D — Profits and Gains of Business or ProfessionITA 1961Up to AY 2026-27

STATUTORY ARCHITECTURE — 18-ROW MAP

Statutory text — Income-tax Act, 1961

Expenditure on scientific research.

35. (1) In respect of expenditure on scientific research, the following deductions shall be allowed—

(i) any expenditure (not being in the nature of capital expenditure) laid out or expended on scientific

research related to the business.

Explanation.—Where any such expenditure has been laid out or expended before the

commencement of the business (not being expenditure laid out or expended before the 1st day of

April, 1973) on payment of any salary as defined in Explanation 2 below sub-section (5) of section

40A to an employee engaged in such scientific research or on the purchase of materials used in

such scientific research, the aggregate of the expenditure so laid out or expended within the three

years immediately preceding the commencement of the business shall, to the extent it is certified

by the prescribed authority to have been laid out or expended on such scientific research, be

deemed to have been laid out or expended in the previous year in which the business is

commenced ;

(ii) an amount equal to one and one half times of any sum paid to a research association which has as

its object the undertaking of scientific research or to a university, college or other institution to be

used for scientific research :

Provided that such association, university, college or other institution for the purposes of this

clause—

(A) is for the time being approved, in accordance with the guidelines, in the manner and

subject to such conditions as may be prescribed; and

(B) such association, university, college or other institution is specified as such, by notification

in the Official Gazette, by the Central Government :

Provided further that where any sum is paid to such association, university, college or other

institution in a previous year relevant to the assessment year beginning on or after the 1st day of

April, 2021, the deduction under this clause shall be equal to the sum so paid;

(iia) any sum paid to a company to be used by it for scientific research:

Provided that such company—

(A) is registered in India,

(B) has as its main object the scientific research and development,

(C) is, for the purposes of this clause, for the time being approved by the prescribed authority

in the prescribed manner, and

(D) fulfils such other conditions as may be prescribed;

(iii) any sum paid to a research association which has as its object the undertaking of research in social

science or statistical research or to a university, college or other institution to be used for research

in social science or statistical research :

Provided that such association, university, college or other institution for the purposes of this

clause—

(A) is for the time being approved, in accordance with the guidelines, in the manner and

subject to such conditions as may be prescribed; and

(B) such association, university, college or other institution is specified as such, by notification

in the Official Gazette, by the Central Government.

Explanation.—The deduction, to which the assessee is entitled in respect of any sum paid to a

research association, university, college or other institution to which clause (ii) or clause (iii) or to

a company to which clause (iia) applies, shall not be denied merely on the ground that, subsequent

to the payment of such sum by the assessee, the approval granted to the association, university,

college or other institution referred to in clause (ii) or clause (iii) or to a company referred to in

clause (iia) has been withdrawn;

(iv) in respect of any expenditure of a capital nature on scientific research related to the business

carried on by the assessee, such deduction as may be admissible under the provisions of

sub-section (2) :

Provided that the research association, university, college or other institution referred to in clause (ii) or

clause (iii) shall make an application in the prescribed form and manner to the Central Government for the

purpose of grant of approval, or continuance thereof, under clause (ii) or, as the case may be, clause (iii) :

Provided further that the Central Government may, before granting approval under clause (ii) or clause

(iii), call for such documents (including audited annual accounts) or information from the research

association, university, college or other institution as it thinks necessary in order to satisfy itself about the

genuineness of the activities of the research association, university, college or other institution and that

Government may also make such inquiries as it may deem necessary in this behalf :

Provided also that any notification issued, by the Central Government under clause (ii) or clause (iii),

before the date on which the Taxation Laws (Amendment) Bill, 2006 receives the assent of the President,

shall, at any one time, have effect for such assessment year or years, not exceeding three assessment years

(including an assessment year or years commencing before the date on which such notification is issued) as

may be specified in the notification:

Provided also that where an application under the first proviso is made on or after the date on which the

Taxation Laws (Amendment) Bill, 2006 receives the assent of the President, every notification under clause

(ii) or clause (iii) shall be issued or an order rejecting the application shall be passed within the period of

twelve months from the end of the month in which such application was received by the Central

Government:

Provided also that every notification under clause (ii) or clause (iii) in respect of the research association,

university, college or other institution or under clause (iia) in respect of the company issued on or before the

date on which this proviso has come into force, shall be deemed to have been withdrawn unless such

research association, university, college or other institution referred to in clause (ii) or clause (iii) or the

company referred to in clause (iia) makes an intimation in such form and manner, as may be prescribed, to

the prescribed income-tax authority within three months from the date on which this proviso has come into

force, and subject to such intimation the notification shall be valid for a period of five consecutive

assessment years beginning with the assessment year commencing on or after the 1st day of April, 2022:

Provided also that any notification issued by the Central Government under clause (ii) or clause (iia) or

clause (iii), after the date on which the Taxation and Other Laws (Relaxation and Amendment of Certain

Provisions) Bill, 2020 receives the assent of the President, shall, at any one time, have effect for such

assessment year or years, not exceeding five assessment years as may be specified in the notification.

(1A) Notwithstanding anything contained in sub-section (1), the deduction in respect of any sum paid to the

research association, university, college or other institution referred to in clause (ii) or clause (iii), or the

company referred to in clause (iia) of sub-section (1), shall not be allowed, unless such research association,

university, college or other institution or company—

(i) prepares such statement for such period as may be prescribed and deliver or cause to be delivered

to the said prescribed income-tax authority or the person authorised by such authority such

statement in such form, verified in such manner, setting forth such particulars and within such time,

as may be prescribed:

Provided that such research association, university, college or other institution or the company

may also deliver to the prescribed authority a correction statement for rectification of any mistake

or to add, delete or update the information furnished in the statement delivered under this

sub-section in such form and verified in such manner as may be prescribed;

(ii) furnishes to the donor, a certificate specifying the amount of donation in such manner, containing

such particulars and within such time from the date of receipt of sum, as may be prescribed.

(2) For the purposes of clause (iv) of sub-section (1),—

(i) in a case where such capital expenditure is incurred before the 1st day of April, 1967, one-fifth of

the capital expenditure incurred in any previous year shall be deducted for that previous year; and

the balance of the expenditure shall be deducted in equal instalments for each of the four

immediately succeeding previous years ;

(ia) in a case where such capital expenditure is incurred after the 31st day of March, 1967, the whole

of such capital expenditure incurred in any previous year shall be deducted for that previous year :

Provided that no deduction shall be admissible under this clause in respect of any expenditure

incurred on the acquisition of any land, whether the land is acquired as such or as part of any

property, after the 29th day of February, 1984.

Explanation 1.—Where any capital expenditure has been incurred before the commencement of

the business, the aggregate of the expenditure so incurred within the three years immediately

preceding the commencement of the business shall be deemed to have been incurred in the

previous year in which the business is commenced.

Explanation 2.—For the purposes of this clause,—

(a) "land" includes any interest in land ; and

(b) the acquisition of any land shall be deemed to have been made by the assessee on the date

on which the instrument of transfer of such land to him has been registered under the

Registration Act, 1908 (16 of 1908), or where he has taken or retained the possession of

such land or any part thereof in part performance of a contract of the nature referred to in

section 53A of the Transfer of Property Act, 1882 (4 of 1882), the date on which he has so

taken or retained possession of such land or part ;

(ii) notwithstanding anything contained in clause (i), where an asset representing expenditure of a

capital nature incurred before the 1st day of April, 1967, ceases to be used in a previous year for

scientific research related to the business and the value of the asset at the time of the cessation,

together with the aggregate of deductions already allowed under clause (i) falls short of the said

expenditure, then—

(a) there shall be allowed a deduction for that previous year of an amount equal to such

deficiency, and

(b) no deduction shall be allowed under that clause for that previous year or for any

subsequent previous year ;

(iii) if the asset mentioned in clause (ii) is sold, without having been used for other purposes, in the year

of cessation, the sale price shall be taken to be the value of the asset at the time of the cessation ;

and if the asset is sold, without having been used for other purposes, in a previous year subsequent

to the year of cessation, and the sale price falls short of the value of the asset taken into account at

the time of cessation, an amount equal to the deficiency shall be allowed as a deduction for the

previous year in which the sale took place ;

(iv) where a deduction is allowed for any previous year under this section in respect of expenditure

represented wholly or partly by an asset, no deduction shall be allowed under clause (ii) of

sub-section (1) of section 32 for the same or any other previous year in respect of that asset ;

(v) where the asset mentioned in clause (ii) is used in the business after it ceases to be used for

scientific research related to that business, depreciation shall be admissible under clause (ii) of

sub-section (1) of section 32.

(2A) Where, before the 1st day of March, 1984, the assessee pays any sum (being any sum paid with a

specific direction that the sum shall not be used for the acquisition of any land or building or construction of

any building) to a scientific research association or university or college or other institution referred to in

clause (ii) of sub-section (1) or to a public sector company to be used for scientific research undertaken

under a programme approved in this behalf by the prescribed authority having regard to the social, economic

and industrial needs of India, then,—

(a) there shall be allowed a deduction of a sum equal to one and one-third times the sum so paid ; and

(b) no deduction in respect of such sum shall be allowed under clause (ii) of sub-section (1) for the

same or any other assessment year.

Explanation.—For the purposes of this sub-section, "public sector company" shall have the same meaning

as in clause (b) of the Explanation below sub-section (2B) of section 32A.

(2AA) Where the assessee pays any sum to a National Laboratory or a University or an Indian Institute of

Technology or a specified person with a specific direction that the said sum shall be used for scientific

research undertaken under a programme approved in this behalf by the prescribed authority, then—

(a) there shall be allowed a deduction of a sum equal to one and one-half times the sum so paid ; and

(b) no deduction in respect of such sum shall be allowed under any other provision of this Act :

Provided that the prescribed authority shall, before granting approval, satisfy itself about the feasibility of

carrying out the scientific research and shall submit its report to the Principal Chief Commissioner or Chief

Commissioner or Principal Director General or Director General in such form as may be prescribed:

Provided further that where any sum is paid to such National Laboratory or university or Indian Institute of

Technology or specified person in a previous year relevant to the assessment year beginning on or after the

1st day of April, 2021, the deduction under this sub-section shall be equal to the sum so paid.

Explanation 1.—The deduction, to which the assessee is entitled in respect of any sum paid to a National

Laboratory, University, Indian Institute of Technology or a specified person for the approved programme

referred to in this sub-section, shall not be denied merely on the ground that, subsequent to the payment of

such sum by the assessee, the approval granted to,—

(a) such Laboratory, or specified person has been withdrawn; or

(b) the programme, undertaken by the National Laboratory, University, Indian Institute of Technology

or specified person, has been withdrawn.

Explanation 2.—For the purposes of this section,—

(a) "National Laboratory" means a scientific laboratory functioning at the national level under the

aegis of the Indian Council of Agricultural Research, the Indian Council of Medical Research, the

Council of Scientific and Industrial Research, the Defence Research and Development

Organisation, the Department of Electronics, the Department of Bio-Technology or the Department

of Atomic Energy and which is approved as a National Laboratory by the prescribed authority in

such manner as may be prescribed ;

(b) "University" shall have the same meaning as in Explanation to clause (ix) of section 47 ;

(c) "Indian Institute of Technology" shall have the same meaning as that of "Institute" in clause (g) of

section 3 of the Institutes of Technology Act, 1961 (59 of 1961);

(d) "specified person" means such person as is approved by the prescribed authority.

(2AB)(1) Where a company engaged in the business of bio-technology or in any business of manufacture or

production of any article or thing, not being an article or thing specified in the list of the Eleventh Schedule

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:

Provided that where such expenditure on scientific research (not being expenditure in the nature of cost of

any land or building) on in-house research and development facility is incurred in a previous year relevant to

the assessment year beginning on or after the 1st day of April, 2021, the deduction under this clause shall be

equal to 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 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 fulfils such conditions

with regard to maintenance of accounts and audit thereof and furnishing of reports in such manner as may

be prescribed.

(4) The prescribed authority shall submit its report in relation to the approval of the said facility to the

Principal Chief Commissioner or Chief Commissioner or Principal Director General or Director General in

such form and within such time as may be prescribed.

(5) [***]

(6) No deduction shall be allowed to a company approved under sub-clause (C) of clause (iia) of sub-section

(1) in respect of the expenditure referred to in clause (1) which is incurred after the 31st day of March,

2008.

(2B)(a) Where, before the 1st day of March, 1984, an asses see has incurred any expenditure (not being in

the nature of capital expenditure incurred on the acquisition of any land or building or construction of any

building) on scientific research undertaken under a programme approved in this behalf by the pre scribed

authority having regard to the social, economic and industrial needs of India, he shall, subject to the

provisions of this sub-section, be allowed a deduction of a sum equal to one and one-fourth times the

amount of the expenditure certified by the prescribed authority to have been so incurred during the previous

year.

(b) Where a deduction has been allowed under clause (a) for any previous year in respect of any

expenditure, no deduction in respect of such expenditure shall be allowed under clause (i) of sub-section (1)

or clause (ia) of sub-section (2) for the same or any other previous year.

(c) Where a deduction is allowed for any previous year under this sub-section in respect of expenditure

represented wholly or partly by an asset, no deduction shall be allowed in respect of that asset under clause

(ii) of sub-section (1) of section 32 for the same or any subsequent previous year.

(d) Any deduction made under this sub-section in respect of any expenditure on scientific research in excess

of the expenditure actually incurred shall be deemed to have been wrongly made for the purposes of this Act

if the assessee fails to furnish within one year of the period allowed by the prescribed authority for

completion of the programme, a certificate of its completion obtained from that authority, and the provisions

of sub-section (5B) of section 155 shall apply accordingly.

(3) If any question arises under this section as to whether, and if so, to what extent, any activity constitutes

or constituted, or any asset is or was being used for, scientific research, the Board shall refer the question

to—

(a) the Central Government, when such question relates to any activity under clauses (ii) and (iii) of

sub-section (1), and its decision shall be final;

(b) the prescribed authority, when such question relates to any activity other than the activity specified

in clause (a), whose decision shall be final.

(4) The provisions of sub-section (2) of section 32 shall apply in relation to deductions allowable under

clause (iv) of sub-section (1) as they apply in relation to deductions allowable in respect of depreciation.

(5) Where, in a scheme of amalgamation, the amalgamating company sells or otherwise transfers to the

amalgamated company (being an Indian company) any asset representing expenditure of a capital nature on

scientific research,—

(i) the amalgamating company shall not be allowed the deduction under clause (ii) or clause (iii) of

sub-section (2); and

(ii) the provisions of this section shall, as far as may be, apply to the amalgamated company as they

would have applied to the amalgamating company if the latter had not so sold or otherwise

transferred the asset.

Function in the statutory architecture

Section 35 allows deductions for expenditure on scientific research. Revenue expenditure on scientific research related to the business is deductible, and salary and materials spent in the three years before commencement are treated as spent in the year the business starts, to the extent certified by the prescribed authority. Capital expenditure on such research incurred after 31-3-1967 is deducted in full in the year incurred, but not the cost of land acquired after 29-2-1984.

Sums paid to approved and notified research associations, universities, colleges or institutions for scientific research (clause (ii)), or for social science or statistical research (clause (iii)), and to approved research companies (clause (iia)), are deductible. A company in bio-technology or manufacturing (other than Eleventh Schedule articles) gets a deduction for expenditure, other than on land or building, on an approved in-house research facility under sub-section (2AB). Clause (ii), sub-section (2AA) and sub-section (2AB) state the deduction as one and one-half times the amount, but for previous years relevant to assessment years beginning on or after 1-4-2021 the deduction is equal to the sum paid or expenditure incurred.

Operative consequences

The donee must file prescribed statements and issue a certificate to the donor; otherwise the donor’s deduction is not allowed (sub-section (1A)).
A donor’s deduction is not denied merely because the donee’s approval is withdrawn after the payment (Explanation to sub-section (1); Explanation 1 to sub-section (2AA)).
Where capital expenditure is deducted, no depreciation is allowed on the asset under s. 32(1)(ii) (sub-section (2)(iv)); unabsorbed capital deductions are carried forward like depreciation (sub-section (4)).
Expenditure deducted under sub-section (2AA) or (2AB) is not deductible under any other provision.
Disputes over whether an activity is scientific research go to the Central Government or the prescribed authority, whose decision is final (sub-section (3)).

Status

The section is operative for AY 2026-27. The Finance Act, 2026 does not amend this section.

The 1961 Act governs AY 2026-27 and earlier assessment years; the Income-tax Act, 2025 governs tax year 2026-27 onwards. For this subject, the 2025 Act provision is s. 45.

Case Laws & Commentary

SECTION 35 — Expenditure on scientific research

Important Case Laws — 1961 Treatise (FA 2026)

Provision in brief: Allows deduction for: (i) revenue expenditure on scientific research related to business; (ii) contribution to approved research association, university, college, IIT, etc. (with weighted deduction historically, now 100% for AY 2021-22 onwards under the second proviso to s. 35(1)(ii)); (iii) capital expenditure on scientific research (other than land) — fully allowable u/s 35(2)(ia); (iv) in-house research (sub-s. (2AB)) — earlier weighted 150%/200% deductions, now 100% w.e.f. FY 2020-21; conditions of DSIR approval and Form 3CL apply. Cl. 35(2AA) — payments to National Laboratory, IIT etc. Sub-s. (3): reference of questions by the Board to the Central Government or the prescribed authority. Sub-s. (2)(ii)-(iii): cessation of use or sale of a pre-1967 asset. Sub-s. (5): transfer of a scientific-research asset in a scheme of amalgamation.

Section Commentary

Backbone of R&D incentives

Section 35 is the principal R&D-incentive provision: it allows (i) revenue R&D expenditure on the assessee's own scientific research related to business (sub-s. (1)(i)), (ii) donations to approved external research bodies — universities, IIT, IISc, approved research association etc. (sub-s. (1)(ii) / (iia) / (iii)), (iii) capital R&D expenditure other than on land (sub-s. (1)(iv) read with sub-s. (2)), and (iv) the once-flagship 'weighted' in-house R&D deduction for company assessees under sub-s. (2AB).

Sunset of weighted deductions — AY 2021-22 watershed

Until FY 2019-20, sub-s. (2AB) gave a 150% / 200% weighted deduction (200% till FY 2016-17, 150% from FY 2017-18) to companies for in-house R&D recognised by DSIR. Provisos to ss. 35(1)(ii), 35(2AA) and 35(2AB)(1) bring these deductions to 100% for AY 2021-22 onwards. The practitioner servicing pharma / auto / chemical / IT clients must understand the AY-wise rate to compute correctly for ongoing litigation across earlier years.

Scope of 'scientific research'

Defined in s. 43(4) as 'any activities for the extension of knowledge in the fields of natural or applied science including agriculture, animal husbandry or fisheries'. Mastek (Ahd ITAT) and a long ITAT line confirm that software / IT R&D, biotech, agri-tech all qualify. The scope is much wider than the lay 'laboratory' image — process improvement, product enhancement, prototype testing, clinical-trial design all qualify if the underlying purpose is extension of knowledge.

DSIR mechanics — Mahindra / Sandan Vikas line

For sub-s. (2AB) the assessee must (i) be a company, (ii) operate a recognised in-house R&D facility (DSIR Form 3CK approval), (iii) get the quantum of expenditure certified annually by DSIR in Form 3CL. Mahindra & Mahindra holds that expenditure incurred outside the facility (vendor-premises testing) on the approved programme qualifies — DSIR approval is purpose-based, not strictly location-based. Sandan Vikas holds that belated Form 3CL cannot defeat substantive entitlement — substantial compliance suffices.

Donations — donor-protection principle

Jindal Steel & Power (P&H) and the Chotatingrai Tea (SC) line establish that retrospective withdrawal of donee's approval cannot defeat donor's claim if the donee held valid approval at the time of donation. The donor's entitlement crystallises on the date of donation. The Explanation to s. 35(1) states that the deduction 'shall not be denied merely on the ground' that the donee's approval was withdrawn after the payment.

Capital R&D — s. 35(2)(ia)

Capital expenditure on R&D (other than land) is fully allowable in the year of incurrence under s. 35(1)(iv) read with s. 35(2)(ia) — no five-year amortisation, no depreciation under s. 32. Wheels India (Mad) confirms that even buildings used wholly for R&D qualify for full deduction, displacing s. 32. Section 35(2)(iv) bars simultaneous depreciation.

Practical compliance for CA

(i) Maintain DSIR approval letter and renewal trail. (ii) Segregate R&D expenditure books — capital vs revenue, in-house vs sub-contracted. (iii) Form 3CL filing — coordinate with DSIR liaison. (iv) For donations, obtain donee's Form 58/79IF certificate, verify approval status on the IT department portal. (v) Avoid double-claim under s. 37 / s. 32 for amounts claimed under s. 35 — Talisma Corpn. confirms mutual exclusivity. (vi) Form 3CD Cl. 19 captures s. 35 claims.

FA 2026 impact: No fresh FA 2026 amendment. Note: for AY 2021-22 onwards, all weighted (150%/175%/200%) deductions have come down to 100%. FA 2025 made no change.

Leading Decisions

1. CIT v. Mahindra & Mahindra Ltd.

Citation: (2009) 313 ITR 263 (Bom)

Forum: Bombay High Court

Facts & Issue: Assessee claimed weighted deduction u/s 35(2AB) for in-house R&D expenditure. Some expenditure was incurred outside the approved R&D facility (at vendors' premises for prototype testing). Revenue restricted weighted deduction to expenditure incurred AT the approved facility.

Held / Ratio: Held that s. 35(2AB) is purpose-based, not facility-based. So long as the expenditure is incurred ON in-house R&D approved by DSIR, the precise physical location is not decisive — vendor-premises testing forming part of the approved programme qualifies. The Court emphasised the policy of incentivising R&D and rejected hyper-technical restriction.

Section relevance: Important authority on scope of s. 35(2AB) — purpose vs location.

2. CIT v. Sandan Vikas (India) Ltd.

Citation: (2011) 335 ITR 117 (Del)

Forum: Delhi High Court

Facts & Issue: Assessee had DSIR approval as a recognized in-house R&D facility, but Form 3CL (quantification certificate from DSIR) was issued belatedly. Revenue denied weighted deduction.

Held / Ratio: Held that Form 3CL is a procedural certificate; substantive entitlement under s. 35(2AB) flows from recognition. Belated issuance of Form 3CL cannot defeat the claim if the expenditure and recognition are otherwise established. Substantial compliance suffices.

Section relevance: Procedural-vs-substantive distinction under s. 35(2AB) — frequently invoked.

3. DCIT v. Mastek Ltd.

Citation: (2012) 25 taxmann.com 133 (Ahd ITAT)

Forum: ITAT Ahmedabad

Facts & Issue: Software-development company claimed weighted deduction u/s 35(2AB). Revenue contended that software development is not 'scientific research'.

Held / Ratio: Held that 'scientific research' u/s 43(4) is broad — includes development of new processes, products and is not confined to laboratory science. Software R&D, when recognised by DSIR, qualifies. The case is regularly cited for IT-sector R&D claims.

Section relevance: Defines 'scientific research' for IT/software industry under s. 43(4) feeding into s. 35.

4. CIT v. Wheels India Ltd.

Citation: (2011) 336 ITR 513 (Mad)

Forum: Madras High Court

Facts & Issue: Capital expenditure on R&D (other than land) — claimed u/s 35(1)(iv) read with s. 35(2). Revenue contended that building used for R&D was eligible only for depreciation u/s 32.

Held / Ratio: Held that capital expenditure on R&D, including buildings used wholly for R&D, qualifies for full deduction u/s 35(1)(iv) / 35(2)(ia) — to the exclusion of s. 32 depreciation. Once allowed u/s 35, depreciation cannot be claimed simultaneously (s. 35(2)(iv)).

Section relevance: Standard authority on capital expenditure under s. 35 vs depreciation under s. 32.

5. CIT v. Talisma Corpn. (P) Ltd.

Citation: (2012) 247 CTR 226 (Kar)

Forum: Karnataka High Court

Facts & Issue: Question of overlap — assessee claimed s. 35(2AB) on expenditure that was also claimed under regular PGBP heads (s. 37). Revenue denied to avoid double benefit.

Held / Ratio: Held that there is no question of double deduction — the assessee is entitled either to claim under s. 35(2AB) (with weighted deduction, then) or under s. 37 (at 100%). Once claimed under s. 35(2AB), the same expenditure cannot also reduce profits under s. 37. The system is mutually exclusive.

Section relevance: Defines mutual exclusivity of s. 35 and s. 37 — avoids double-counting.

6. CIT v. Jindal Steel & Power Ltd.

Citation: (2017) 88 taxmann.com 220 (P&H)

Forum: Punjab & Haryana High Court

Facts & Issue: Donation to an approved research association (s. 35(1)(ii)) — Revenue alleged that the institution's approval was later withdrawn retrospectively, hence weighted deduction should not be allowed.

Held / Ratio: Held that retrospective withdrawal of approval of the donee institution cannot defeat the donor's claim, since at the time of donation the assessee acted in good faith on a valid certificate. The Court relied on the principle that a donor's entitlement crystallises at the time of donation. (The Explanation to s. 35(1) provides that the deduction shall not be denied merely because the approval was withdrawn after the payment.)

Section relevance: Important for handling withdrawn-approval cases under s. 35(1)(ii) / (iia) / (iii). Read with the Explanation to s. 35(1).

— End of Section 35 Case-Law Note —

Case law on Section 35

ITAT, High Court and Supreme Court judgments applying this section, on BharatTax.net, our income tax case law search.

← All sections (940)Act 1961 hub

Income-tax Act, 1961	Income-tax Act, 2025
s. 35(1)(i), (iv), (2) — revenue and capital expenditure on in-house scientific research related to business	s. 45(1)
s. 35(2AB) — in-house research and development facility of bio-technology or manufacturing companies	s. 45(2)
s. 35(1)(ii), (iia), (iii), (2AA) — sums paid to research associations, universities, approved companies, National Laboratories, IITs and specified persons	s. 45(3), (4), (5), (8)
s. 35(3), (5) — reference of questions; amalgamation	s. 45(9), (10)