Explain in brief the treatment as to the taxability and/or allowability, in the context of provisions contained under the Income-tax Act, 1961 for the assessment year 2016-17, in the following cases: Chetan Ltd. did not

As per section 35(1)(iv) of the Income Tax Act 1961 , deduction in respect of capital expenditure on scientific research would be admissible under the provisions of section 35(2) only, if, the scientific research relates to the business carried on by the assessee. In the given case, Chetan Ltd. did not have any active business carried on by it to which said scientific research related to. The capital expenditure incurred by Chetan Ltd. related to its subsidiary company. Accordingly, Chetan Ltd. had not incurred any expenditure on scientific research relating to its business and is not eligible for deduction under the provision of section 35(1)(iv) and therefore the expenses is not allowable as deduction.