Section 43(4) defines the scientific research as activities for the extension of knowledge in the fields of natural or applied sciences including agriculture, animal husbandry or fisheries.
References to expenditure incurred on scientific research include all expenditure incurred for the prosecution, or the provision of facilities for perusing the scientific research, but does not include any expenditure incurred on the acquisition of rights in or arising out of scientific research. References to scientific research related to a business or class of business include
(a) any scientific research which may lead to or facilitate an extension of that business or, as the case may be, all business of that class; —
(b) any scientific research of a medical nature and which has a special relation to the welfare of workers employed in that business or, as thecase may be, all businesses of that class.
All expenses incurred by assessee on promotion of research can be divided into two broad categories.
(A) Expenses on research carried on by the assessee himself/In house research.
(B) Research activities carried on by an outside agency or body and the assessee helps such a body through finance.
Broadly, expenditure on scientific research can be divided in the following two categories Expenditure on Scientific Research