2011 (2) TMI 330 - PUNJAB AND HARYANA HIGH COURT

Deduction u/s 80IB - Revenue cannot be permitted to raise an issue in isolation in one year while accepting the finding on the same issue in assessee’s own case of an earlier year - the appellant’s contention that there is no reason to change the method of accounting regularly followed by it in writing off 80 per cent of tools and dies purchased every year - No new facts have been emerged this year which can justify the change in revenue’s stand - That being the case, even if the tool/die is used for a few days, its value will reduce to the scrap value of the products

As regards designing and consultancy charges on tools and dies being treated as revenue expenses, the Assessing Officer held that the said expenditure was required to be capitalized - The CIT (Appeals),correctly inferred that the consultancy charges is a revenue expenditure incurred in the course of carrying on the business and the same does not loss its revenue character merely because it is incurred in relation to tools/dies

The Assessing Officer held that for earning dividend income, the assessee must be presumed to have incurred some expenditure which had been disallowed under section 14A - In this regard, the facts are that the assessee had earned income by way of interest on UTI Bonds and dividend of Rs. 54,000 and Rs. 9,30,8912 respectively, which was exempted from tax - There cannot be a presumption that certain expenditure is bound to be incurred for earning the exempt income - Quite clearly, the Assessing Officer had only made a presumption that certain expenditures have been incurred for earning the impugned exempt incomes

Amount spent on consultancy on tools and dies are obviously revenue expenditure as expenditure on tools and dies itself could not be treated as capital expenditure - On the issue of disallowance under section 14A presumptive expenditure in absence of actual expenditure could not be taken into account - Both the appeals are dismissed