The PCIT passed an order u/s 263 of the Act wherein he set aside the set aside assessment order framed by the AO u/s.143(3) of the Act, stating that the assessee was engaged in the production of cosmetic products, which is one of the articles listed in Eleventh Schedule to which deduction u/s.35(2AB) of the Act does not apply and therefore, the AO has erroneously allowed claim of deduction to the assessee u/s.35(2AB) of the Act, in contravention of said section without carrying out any verification or enquiry.

The ITAT observed that the AO had gone through the various documents furnished and also the approval received by the assessee from the DSIR for claiming deduction u/s 35(2AB) of the Act during the scrutiny proceedings and after examining the same allowed the claim of deduction u/s 35(2AB) of the Act. Insofar as the question as to whether the AO has any power to question the approval granted by DSIR u/s 35(2AB) of the Act, the ITAT held that the decision of DSIR is final as per sub-rule 5A of Rule 6 of the IT Rules, 1962. Therefore, the revision order was set aside.  (AY. 2011-12)