Theexpenditure Is Incurred On An In-House R & Dfacility, Further The Decision Relied Upon By Thetribunal In The Case Of Cadila Healthcare Limitedhas Not Reached v. Cadila Healthcare Ltd.2014 Taxmann 6/7And Has Answered The Issue In.favour Of The Assessee. It Is Further Submitted That No!Independent Finding Has Been Recorde

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 13TH DAY OF NOVEMBER 27072PRESENT| THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASADILT.A. NO.104 OF 2017 BEITWEEN 1.PRL. COMMISSIONER OF INCOME TAX (CENTRAL), C.R. BUILDINGS QUEENS ROAD, BANGALORE-S60001. 2D.ASSISTANT COMMISSIONER OF INCOME-TAX| LTU, BANGALORE. ... APPELLANTS (BY SRI. E.I1. SANMATHI, ADV.) AND M/S. MICRO LABS LITD.,2/7, KCN TOWERSRACE COURSE ROAD|BANGALOREPAN AABCM 2Z131LN. | (BY SRI. S. PARTHASARATHI, ADV.) ... RESPONDENT THIS IB.T.A. IS FILED UNDER SECTION 260-A OFIL.T.ACT, 1961, ARISING OUT OF ORDER DATED 16-09-2016PASSED IN ITA NO.4/BANG/2014, FOR THE ASSESSMENTYEAR 2010-11, PRAYING [TQ DECIDE THE FOREGOING QUESTION OF LAW AND/OR SUCH OTHER QUESTIONS OF)LAW AS MAY BE FORMULATED BY THE HON'BLE COURT ASDEEMED FIT AND SET ASIDE THE APPELLATE ORDER DATED16-09-2016 PASSED BY THE ITAT, A BENCH, BENGALURU,IN APPEAL PROCEEDINGS IN ITA NO.4/BANG/2014 FORASSESSMENT YEAR 2010-11, AS SOUGHT FOR IN THIS)APPEAL; AND TO GRANT SUCH OTHER RELIEF AS DEEMEDFIT, IN THE INTEREST OF JUSTICE.| THIS I.T.A. COMING ON FOR HEARING, THIS DAY,|ALOK ARADHE J.,DELIVERED THE FOLLOWING: JUDGMENT This appeal under Section 260-A of the Income TaxAct, 1961 (hereinafter referred to as ‘the Act’, for short).has been preferred by the revenue. The subject matter|of the appeal pertains to the Assessment Year 2010-11.The appeal was admitted by a Bench of this Court videorder dated 28.11.2017 to consider the _ followinsubstantial question of law: “Whether, on the facts and in the circumstances|of the case, the Tribunal was right in setting.aside|thedisallowanceofexpenditureOT Rs.8,91,/6,8/0/- claimed as deduction under|section35(2)(AB) of)theAct.whichWef.econducted outside the in-house R & D facility|even when the AO has rightly held that clinical trial expenditure is not eligible for weighted R &D deduction under section 35(2)(AB) and it will|be eligible for weighted deduction only if the|expenditure is incurred on an in-house R & D|facility, further the decision relied upon by the|Tribunal in the case of Cadila Healthcare Limited|has not reached finality.” 3. Facts giving rise to the filing of this appeal|briefly stated are that the assessee is a companyengagedIn|thebuSINeSSofmanufactureOf pharmaceuticals. The assessee filed return of income.for the Assessment Year 2010-11 on 18.09.7010|declaring the total income of Rs.66,/76,95,460/-. The|AssessingOfficer,videorder|dated|18.05.7201)completed the assessment on book profits chargeableunder Section 115-JB of the Act at Rs.2,55,75,40,181/-|while income under normal provision was assessed atRs.65,56,91,920/-. Being aggrieved, the assessee filed|an appeal before the Commissioner of Income Tax.(Appeals), who by an order dated 18.09.2013, partly allowed the appeal. The assessee thereupon filed an-appeal before the Tribunal. The Tribunal, vide orderdated 16.09.2016, set aside the disallowance ofexpenditure of Rs.8,91,/6,8/0/- claimed as deduction.under Section 35(2)(AB) of the Act which was conductedoutside the inhouse research and development facility. |In the aforesaid factual background, the revenue has|filed this appeal. 4. Learned counsel for the revenue, while inviting|the attention of this Court to the order passed by theTribunal, submitted that the Tribunal, while allowing the|deduction in respect of expenses incurred on scientificresearch, has placed reliance on the decision of GujaratHign Court in"CIT Vs. CADILA HEALTHCARE LTD.2014 TAXMANN 6/7and has answered the issue In.favour of the assessee. It is further submitted that no!independent finding has been recorded by the Tribunal on the aforesaid issue. The aforesaid fact could not be|disputed by the learned counsel for the assessee. 4. Learned counsel for the revenue, while inviting|the attention of this Court to the order passed by theTribunal, submitted that the Tribunal, while allowing the|deduction in respect of expenses incurred on scientificresearch, has placed reliance on the decision of GujaratHign Court in"CIT Vs. CADILA HEALTHCARE LTD.2014 TAXMANN 6/7and has answered the issue In.favour of the assessee. It is further submitted that no!independent finding has been recorded by the Tribunal on the aforesaid issue. The aforesaid fact could not be|disputed by the learned counsel for the assessee. 5. We have considered the submissions made onboth sides and have perused the record. From perusalof paragraph 9 of the order passed by the Tribunal, it is evident that the Tribunal has allowed the deduction in|respect of expenses incurred by the assessee on.scientific research on innouse research and development.facility by placing reliance on the decision of the Gujarat|High Court. It is pertinent to mention here that against|the aforesaid decision, the revenue preferred specialleave petition and the Supreme Court, by order dated13.10.2015 in SLP No.7/70/2015 nas remitted the matterto the High Court for consideration afresn along witnother issues. Since the Tribunal has neither recorded|any reasons nor has recorded any findings on the claim|of the assessee, we are left with no option but to quasn.the order of tne Tribunal dated 16.02.2016 Insofar as It! pertains to claim of deduction of assessee under Section.35(2)(AB) of the Act and remit the matter to theTribunal for decision afresh In accordance with law after|affording an opportunity of hearing to the parties. |Therefore, it is not necessary for us to answer thesubstantial question of law. In the result, the appeal is disposed of. Sd/-|JUDGE Sd/-'JUDGE RV