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2015 (11) TMI 1374 - AT - Income TaxExpenditure incurred towards product and development expenditure - revenue v/s capital expenditure - CIT(A) treated as revenue - Held that:- Admittedly, the assessee is engaged in the business of manufacture and sale of highway axles and components for tractors, earth moving equipment etc. Since the market is very competitive one, the assessee has to come out with new features in the products to remain in the field. Therefore, it is a necessity for the assessee for constant upgradation of the original product already manufactured and sold by it. The Hon’ble Gujarat High Court in the case of Gujarat Small scale Industries Corporation (1981 (7) TMI 8 - GUJARAT High Court) has held that expenses incurred after the manufacture of a product but before marketing it in order to test its quality and suitability for marketing is revenue expenditure in nature . Further, the amount incurred by the assessee on account of product development expenses in the facts and circumstances of the case is very negligible for which it cannot be considered as capital in nature. In view of the above and in view of the detailed reasoning given by the Ld.CIT(A), we find no infirmity in the order of the CIT(A) on this issue - Decided against revenue Expenditure incurred towards shifting of its manufacturing operations - revenue v/s capital expenditure - CIT(A) treated as revenue - Held that:- Shifting expenditure incurred by the assessee is for carrying on its business operation and the same is incurred wholly and exclusively for the purpose of business and has to be treated as revenue expenditure. In this view of the matter we uphold the order of the CIT(A) on this issue and the ground raised by the revenue is dismissed.- Decided against revenue Disallowance made on the issue of provision for warranty - CIT(A) allowed the claim - Held that:- No infirmity in the order of the CIT(A) deleting such addition. Admittedly, the AO following his order for earlier years in assessee’s own case, disallowed warranty provision made during the year. We find the Tribunal in assessee’s own case for A.Y. 2006-07 has deleted such disallowance. Since the issue has already been decided by the Tribunal in favour of the assessee, therefore, in absence of any contrary material brought to our notice against the order of the Tribunal in assessee’s own case, on this issue, we find no infirmity in the order of the CIT(A) deleting such addition - Decided against revenue
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