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2015 (10) TMI 1604 - AT - Income TaxDisallowance of expenses of Research & Development - Held that:- Assessee has debited a sum of project expenses written off, which was incurred by the assessee in past years in respect to testing of multi fuel system by Automotive Research Association of India. We find that the AO disallowed the claim in view of specific provision of section 37(1) of the Act by holding that the expenses are not expended wholly and exclusively for the purpose of business as no business activity in past years or in the relevant year are carried out, which can be said to be related to Multi Fuel System. He further opined that these expenses relates to prior period i.e. incurred in FY 2004-05 relevant to AY 2005-06 and not to the FY 2005-06 relevant to AY under dispute 2006-07. Today, when Ld. counsel for the assessee was enquired about the year of incurring of these expenses and also whether the assessee is in the business of pollution control devices, he categorically admitted that this is a new line of business, which was to be started. According to him, this was on- going process and these expenses are for earning of future income. We find no substance in the argument of the Ld. counsel for the assessee and the lower authorities have given a concurrent finding that there is no business relating to this project, which is abandoned. In such circumstances, we confirm the orders of the lower authorities and this issue of assessee’s appeal is dismissed. - Decided against assessee.
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