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2018 (5) TMI 1173 - HC - Income TaxDeduction incurred as product development expenses - revenue deduction - whether it has enduring benefits to the assessee and hence was capital expenditure in nature? - Held that:- Assessee who was engaged in manufacturing textile products, had expended the amount in question for product development undertaken by a sister concern of the assessee on its behalf. The research work did not involve development of a new product or even a new technique or technology to manufacture existing product more efficiently. He is aimed at improving the quality of the existing products of the assessee. Essentially thus, the expenditure was for the assessee's existing business and was for the purpose of improving the quality of the existing products. As rightly pointed out by the counsel for the assessee, in somewhat similar situations, three High Courts have held that the expenditure should be treated as revenue expenditure. See Commissioner of Income tax, Faridabad v. Escorts Auto Components Ltd. [2008 (3) TMI 248 - PUNJAB AND HARYANA HIGH COURT], Commissioner of Income tax, Bangalore v. Tejas Networks India (P.) Ltd [2014 (10) TMI 364 - KARNATAKA HIGH COURT] and Commissioner of Incometax I v. ACL Wireless Ltd. reported in [2013 (12) TMI 1160 - DELHI HIGH COURT] - Decided in favour of assessee.
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