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2014 (5) TMI 887 - AT - Income TaxValidity of order u/s 147 of the Act – Mere change of opinion - Claim of deferred revenue expenses – Held that:- CIT(A) has clearly made a finding that the issue of deferred revenue expenses had cropped up in the regular assessment proceedings for the AY under consideration and the assessee company vide its letter dated 14.09.2005 had submitted a detailed explanation of the - CIT(A) held that the AO could not have held that the issue of deferred revenue expenditure was not examined by the AO in the scrutiny proceedings u/s 143(3) - from the records it could not be found that subsequently after AY 2001-02, any action other than the reassessment has been taken by the department to reopen the assessments of earlier years where deferred revenue expenses have been claimed in its entirety by the assessee company and which were allowed by the AO - there was no fresh material, let alone any tangible material in the possession of the AO so as to empower/ enable him to take recourse to the provisions of section 147 of the Act - the conclusion of the CIT(A) that the reopening of assessment was based merely on change of opinion is correct – Decided against Revenue. Deletion of addition on capitalizing of expenses – Development of new product – Held that:-Following Radhasoami Satsang Vs. CIT [1991 (11) TMI 2 - SUPREME Court] - the treatment given to a particular item of the expenditure in books of account should not by itself be taken as conclusive evidence for treating the expenditure as capital or revenue expenditure - The law empowers the AO to assess the income of the assessee according to law and determine the tax payable - he cannot assess an assessee on an amount, which is not taxable in law, even if the same was shown by an assessee - There neither are any estoppels by conduct against law nor is there any waiver of the legal right as much as the legal liability to the assessed otherwise than according to the mandate of the law - CIT(A) has correctly concluded that the expenses would reveal that the expenses incurred by the assessee in both the Years is such, which will not create any capital asset in the hand of the assessee- the expenses cannot give any advantage of enduring nature in the capital field – thus, there was no infirmity in the order of the CIT(A) – Decided against Revenue.
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