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2015 (6) TMI 924 - AT - Income TaxReopening of assessment - disallowance of development charges - Held that:- It is an undisputed position that expenses in question are incurred on testing the performance of local components vis-à-vis similar components used outside India, to improve performance, import substitution and monitoring compliance with safety standards, and for bench marking performance of it's products. This exercise is essentially a continuous process which permeates different accounting years, and does not result in such an enduring advantage so as to render the expenses as capital expenditure in nature. Testing for products is not a one time event which leads to benefit in the capital field particularly in a situation like this where it is an integral part of routine manufacturing and monitoring activity. Viewed thus, the authorities below were clearly in error in holding the development expenses to be capital expenditure. - Decided in favour of assessee.
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