This appeal by assessee is preferred against order of CIT(A) on following grounds: "(i) Commissioner of Income-tax (Appeals)-IX, Mumbai [hereinafter referred to as CIT(A) ] erred in upholding disallowance of expenditure on scientific research of Rs. 96,99,624 claimed under s. 35(1)(iv) of IT Act, 1961. (ii) CIT(A) ought to have directed AO to recompute interest under s. 234B on giving effect to appellate order." We have heard rival submissions and carefully perused order of authorities below and documents placed on record. With regard to ground No. 1, it is noticed that assessee has claimed deduction under s. 35(1)(iv) sum of Rs. 96,99,624. assessee has stated that it is engaged in research business and investment, in joint ventures. principal objective of company is engaging in specialised research activities and to enter into joint ventures with Indian companies to undertake manufacture of chemicals. assessee was asked to justify claim in this regard. In response thereto it was stated that assessee was engaged in business of carrying out specialised research activities for two persons namely CIBA Speciality Chemicals Ltd. of Switzerland and Chiron Diagnostic of USA and also stated that expenditure of capital nature on scientific research related to business of assessee would therefore be allowable as deduction. AO was not convinced with this explanation of assessee and he disallowed expenditure on scientific research on ground that it is not laid out in scientific research related to business. AO has also observed that s. 43(4)(iii) dearly defines scientific research and also emphasises aspect that it has to be related to business . In same definition, it also refers to extension of that business. He further observed that IT Act pre-supposes existence of some business for research to be carried out. assessee preferred appeal before CIT(A) and placed heavy reliance upon order of Allahabad Bench of Tribunal in case of CIT vs. U.P. Electronic Corpn. Ltd. (2006) 201 CTR (All) 331: (2005) 276 ITR 45 (All) and also of Bombay Bench of Tribunal in case of Veekers Spray vs. CIT (ITA Nos. 2035 & 2036/Bom/1977-78), but did not find favour with him. Now assessee is before us with submissions that assessee s main business is to provide consultancy services on basis of specialised research activities and from this activity it has earned income of Rs. 5,68,07,297. Whatever scientific research activities are undertaken by assessee, it was with objectives to prepare scientific and analytical report or to provide consultancy service to desired person. It has already stated before AO that he was engaged in business of carrying out specialised research activities for two persons namely CIBA Speciality Chemicals Ltd. of Switzerland and Chiron Diagnostic of USA and whatever datas or informations were collected on basis of scientific research, it were furnished to these companies and income earned in lieu of that was offered to tax. He has also invited our attention to judgment of Allahabad High Court in case of U.P. Electronic Corpn. Ltd. (supra) in which their Lordships have held that term business is to be given wide meaning and with rapid advancement and growth in field of science and technology even consultancy services offered would be covered under term business. For providing consultancy services, expenditure from scientific research under s. 35 of IT Act, is allowable as it was laid out or expended or related to business. learned Departmental Representative on other hand has submitted that expenditure of capital nature on scientific research can be allowed to be deducted if it is related to business carried on by assessee. Since assessee was not doing any other business except scientific research, capital expense incurred thereon cannot be allowed under s. 35(1)(iv) of IT Act. We have heard rival submissions and carefully perused orders of authorities below and judgment referred to assessee. Undisputedly, assessee was engaged only in scientific research activities but datas collected in scientific research were utilised by two companies namely CIBA Speciality Chemicals Ltd. of Switzerland and Chiron Diagnostic of USA and on account of furnishing information developed on basis of scientific research activities, assessee has earned substantial income. Now question arises whether expense of capital nature incurred on scientific research are eligible for deduction under s. 35 of Act; where assessee is engaged in specialised scientific research activities and providing specialised consultancy on datas collected in scientific research to other companies? It is also to be seen whether providing of consultancy services or providing datas, collected on scientific research, amounts to business activity of assessee? These questions were examined by Allahabad High Court in case of U.P. Electronic Corpn. Ltd. (supra). facts of this case are that assessee is Government undertaking and had been set up with basic object of promoting and developing electronic industries in State of U.P. In beginning it set up factory to manufacture black and white T.V. sets w.e.f. 1st April, 1987. State Government created certain separate corporations. factories owned by assessee were transferred to different corporations set up by State Government namely, Uptron, Uptron Digital Systems, Uptron Communications, etc. These corporations were wholly owned subsidiaries of assessee. After transfer of factories, respondent assessee was engaged mainly in work of research and development. results of such research and development were used by factories which were wholly owned subsidiaries. Besides research work, assessee was engaged in providing consultancy services for which during year under consideration it received sum of Rs. 6,72,992 as fee. It had also received Rs. 3,03,000 from State Government for preparing feasibility reports. Apart from it, it had also received sum of Rs. 6,46,300 from promotion and development of electronic industry in State. It claimed deduction of Rs. 19,23,250 under s. 35 of Act which related to expenditure on scientific research. Tribunal held that subsidiary companies have not made any claim of deduction under s. 35 of Act on expenditure incurred by assessee on scientific research. It was further found that objects for which assessee was established would promote and develop electronic industry to establish companies associations, etc. Tribunal has also observed that assessee s main income was from consultancy charges and preparation of feasibility reports for setting up electronic industries. While dealing with issue, their Lordships have observed that expenditure on scientific research under s. 35 of Act is allowable only when such expenditure is laid out or expended or related to business. term business is to be given wide meaning and with rapid advancement and growth in field of science and technology even consultancy services offered would be covered under term business. Their Lordships further observed that providing consultancy is major source of revenue and it is not at all required to confine term business to mean only sale and purchase of merchandise or manufacturing activities. Having observed that assessee had derived income from consultancy services, preparation of feasibility report and other connected activities, their Lordships have held that it had carried on business during assessment year in question and was entitled for allowance of expenditure incurred on scientific research which was related to its business. From perusal of these judgments, we are of view that scientific research must be performed for or relating to business of assessee. business may be of consultancy services or preparation of feasibility report. But expenditure of capital nature on scientific research can only be allowed to be deducted under s. 35 if it is related to business of assessee. No doubt, these days there are various facet of business/activities including rendering consultancy services of any nature, preparation of feasibility report on basis of datas collected on survey or scientific research and its meaning cannot be restricted to sale and purchase of merchandise or manufacturing activities. In case of U.P. Electronics (supra), assessee was engaged in consultancy services and preparation of feasibility report and their Lordships have held that assessee was engaged in business independent to scientific research activities. Turning to facts of case in hand, we find that assessee was wholly engaged in scientific research activities and whatever results and datas were obtained and that were utilised by two persons namely CIBA Speciality Chemicals Ltd. of Switzerland and Chiron Diagnostic of USA only. Meaning thereby, assessee can only be called to be extended unit of these two concerns in India, who is engaged in specialised scientific research activity. assessee was not doing any other business independent to research activities whereas according to s. 35(1)(iv) expenditure of capital nature on scientific research can only be allowed to be deducted if it is related to business carried on by assessee. Since assessee was not engaged in any sort of business except scientific research activity, expenditure incurred thereon cannot be called to have incurred scientific research in relation to any business of assessee. language of relevant provision is quite unambiguous and clear and according to it deduction under this section can only be allowed if any expenditure of capital nature on scientific research is related to business carried on by assessee. For sake of reference we reproduce relevant provision as under: "Sec. 35(1) In respect of expenditure on scientific research, following deductions shall be allowed . (iv) in respect of any expenditure of capital nature on scientific research related to business carried on by assessee, such deduction as may be admissible under provisions of sub-s. (2)." Having carefully perused above provision, we are of view that without establishing fact that assessee is engaged (in) any business activity, expenditure of capital nature on scientific research relating to such business cannot be allowed. We, therefore of view that judgment of Allahabad High Court was rendered on different set of facts and no assistance can be drawn in favour of assessee. In instant case, assessee is engaged in scientific research activities and whatever results of scientific research and datas collected thereon were provided only to foreign based companies i.e., CIBA Speciality Chemicals Ltd. of Switzerland and Chiron Diagnostic of USA. assessee has not provided any consultancy services or any informations on basis of datas collected on scientific research to any other persons. As such assessee can only be called to be extended research unit of these two foreign based companies. Since assessee was not engaged in any other activities except scientific research for abovesaid two foreign based companies, it cannot be called that scientific research undertaken by assessee was related to business of assessee to make him eligible for deduction under s. 35 of IT Act. We, therefore, hold that assessee is not entitled for deduction under s. 35 of Act of capital expenditure incurred on scientific research. Accordingly, order of CIT(A) stands confirmed. In result, appeal of assessee is dismissed. *** CIBA INDIA (P) LTD. v. INCOME TAX OFFICER