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2008 (4) TMI 467 - HC - Income TaxBusiness Expenditure- . The assessee had incurred some expenditure towards product development. It appears that the assessee was not financially sound and was a loss making concern and therefore, instead of claiming the entire deduction for product development expenses as a revenue expenditure in one year, it claimed the deduction on a deferred revenue basis. The Assessing Officer passed an assessment order under section 143(3) of the Income Tax Act, 1961 and allowed 10 percent. of the expenses in the assessment year 1996-97. In the subsequent years, the Assessing Officer treated the assessee’s claim under section 35D of the Act and disallowed the expenditure claimed by the assessee as having been incurred in earlier years. The Commissioner (Appeals) confirmed the order of the Assessing Officer. The Tribunal held that the claim of the assessee was to be allowed as the expenditure was genuine and also that the claim under section 35D was for preliminary expenses and not for product development expenses. Held that-the expenditure having been found to be genuine, the expenditure not having been claimed under section 35D of the Act and the expenditure having been accepted earlier by the Assessing Office, the product development expenses were allowable.
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