Scientific Research

This query is : Resolved

Piyush Jain (Querist)
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31 August 2010 Dear Professional Colleagues,

The deduction of scientific research expenditure u/s. 35 is as follows:
Particulars Deduction permissible.
1 Expenditure incurred for own business:
- U/s. 35(2AB) – special activities such as pharmaceuticals, bio-technology, computers etc.
- U/s. 35 – Other cases

Weighted deduction of 150%
Deduction of 100%
2 Contribution to Government’s, approved university’s, college or institution’s laboratory Weighted deduction of 125%.

Query : Whether it is on payment basis or on accrual basis, as my client gets work done from different universities and pay advance to them, however, studies and result take 2-3 years, now for availing weighted deduction, it should be on payment basis or on accrual basis.

Regards,

Piyush Jain

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Guest (Expert)

31 August 2010 Section 35 says

(i) any expenditure (not being in the nature of capital expenditure) LAID OUT or EXPENDED on scientific research related to the business.

Also the section clearly says that
an amount equal to [one and one-fourth] times of ANY SUM PAID] to a [scientific research association]

So it was clear that the deduction is available on payment basis ONLY.

Similar case with the other section also..