DCIT (CC)-2(4) v Macleods Pharmaceuticals Limited

Parties Involved

Facts Summary

The assessee, Macleods Pharmaceuticals Limited, is engaged in the business of manufacturing and dealing in pharmaceutical products. For the assessment years 2018-19 and 2021-22, the assessee filed its return of income and claimed a deduction in respect of manufacturing units at Sikkim under section 80-IE of the Income Tax Act, 1961. The assessee also claimed a deduction under section 35(2AB) for R&D expenses. The Assessing Officer (AO) did not agree with the assessee's submissions that the R&D activities were unrelated to the manufacturing units and allocated the R&D expenditure to the units eligible for deduction under section 80-IE. The Commissioner of Income Tax (Appeals) upheld the AO's decision. The Revenue appealed against the order of the Commissioner of Income Tax (Appeals).…

Legal Issues

• 1. Whether the allocation of R&D expenditure by the Assessing Officer among 801E units and non-801E units on the basis of percentage of sales of respective units to the total sales is baseless and totally unwarranted.

Judgment Outcome

Decided in favour of Revenue.

Precedents Relied Upon

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