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2013 (11) TMI 466 - AT - Income TaxExpenditure to be revenue or capital in nature - Research and Development expenditure i.e. G.E.Linear Development Expenditure, Eaton Project Development - In the books of accounts the assessee has treated them as research and development expenditure. In the computation depreciation @100% has been claimed thereon. Initially, it was the claim of the assessee that these expenditure having been incurred are allowable under section 35(1)(i) and 35(1)(iv) of the Act and alternatively it was claimed that the same is allowable as revenue expenditure under section 37 of the Act – Held that:- Expenditure are incurred on raw material, Sub-contracting charges, power and fuel, salary and wages, bonus, P.F, ESI, LWF, leave encashment, canteen, telephone expenses, printing and stationary, foreign travel expenses and interest. None of these expenditure can be said to have formed a new asset and A.O has admitted that these expenditure are relatable to the business of the assessee then simply for the reasons that these have given some enduring benefit to the assessee cannot be regarded as capital expenditure – In the computation these expenditure were claimed under section 37/ 35(1)(iv) of the Act and going into the nature of expenditure it was held that the expenditure did not reflect that any new capital asset had came into existence. The expenditure were held to be allowable under section 37(1) of the Act – In the present case, expenditure claimed by the assessee are revenue expenditure and are allowable in the year under consideration under section 37(1) of the Act – Decided in favor of Assessee.
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