2004 (9) TMI 325 - AT - Income Tax

Summary

Issues:
1. Deletion of development expenses
2. Recomputation of disallowance under r. 6D

Deletion of Development Expenses:
The appeal by the Revenue pertains to the assessment year 1996-97. The first issue revolves around the deletion of Rs. 12,90,863 representing development expenses. The assessee claimed this amount as revenue expenditure, but the AO disallowed it as capital expenditure based on the Revenue's stance in previous years. The CIT(A) allowed the claim, citing earlier decisions in favor of the assessee for the assessment years 1994-95 and 1995-96. The Tribunal upheld the CIT(A)'s decision, relying on precedents from the assessee's own case for the aforementioned years. Consequently, the Tribunal sustained the order of the CIT(A) and dismissed the Revenue's appeal on this ground.

Recomputation of Disallowance under r. 6D:
The second issue concerns the re-computation of disallowance under r. 6D. The Revenue challenged the CIT(A)'s direction to recompute the disallowance by clubbing all employee journeys together and excluding incidental expenses like conveyance and telephone. The CIT(A) ruled in favor of the assessee, aligning with earlier decisions that all employee journeys should be combined for r. 6D computation, and incidental expenses should not be included. The Tribunal, based on previous rulings in the assessee's case for the assessment year 1995-96 and another decision in favor of the assessee, directed the AO to reevaluate the disallowance under r. 6D in accordance with these decisions. Consequently, the appeal filed by the Revenue was dismissed in this regard.