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41. Deduction for scientific research and development allowance
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41. Deduction for scientific research and development allowance.—(1) A company shall be allowed a deduction equal to two hundred per cent. of the expenditure (not being expenditure in the nature of cost of any land or building) incurred on,—
(a) creating and maintaining an in-house facility for scientific research and development ; and
(b) carrying out scientific research and development in the in-house facility.
(2) The deduction under sub-section (1) shall be allowed if,—
(a) the company creates and maintains an in-house facility for carrying out scientific research and development ;
(b) the research facility is approved by the Central Government on the basis of recommendation of the prescribed authority ; and
(c) the company enters into an agreement with the prescribed authority for co-operation in the research and development facility and for audit of the accounts maintained for such facility.
(3) The approval granted to a predecessor shall be deemed to have been granted to the successor if the approval is transferred to the successor as a result of a business reorganisation.
(4) The deduction under this section shall not be allowed to a company in respect of the expenditure referred to in sub-section (1), if the expenditure is incurred in the course of its business in the nature of scientific research and development.
(5) The Board may for the purposes of this section, prescribe the nature of business, conditions and manner as may be considered necessary for grant of approval.
Clause 41 seeks to provide that a company shall be allowed a deduction equal to two hundred per cent. of the expenditure (not being expenditure in the nature of cost of any land or building) incurred on creating and maintaining an in-house facility for scientific research and development and carrying out scientific research and development in the in-house facility.
The deduction under this clause shall be allowed, if the company creates and maintains an in-house facility for carrying out scientific research and development, the research facility is approved by the Central Government on the basis of recommendation of the prescribed authority and the company enters into an agreement with the prescribed authority for co-operation in the research and development facility and for audit of the accounts of such facility.
The said clause further provides that in case of business re-organisation the approval granted to a predecessor shall be deemed to have been granted to the successor if the approval is transferred to the successor.
The said clause also provides that the deduction under this clause shall not be allowed to a company, if the expenditure is incurred in the course of its business which is in the nature of scientific research and development.
The Board may for the purposes of this clause, prescribe the nature of business, conditions and manner as may be considered necessary for grant of approval.
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