9911796707
TMI Blog2012 (8) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is that Commissioner of Income Tax(Appeals) did not allow the whole of the claim of such development fee/development charges as a revenue expenditure. 2. Short facts apropos are that assessee engaged in manufacture of Automobile parts and components had filed its return for impugned Assessment Year on 28.09.08 declaring an income of Rs.7,87,91,850/-. During the course of assessment proceedings, Assessing Officer noted that assessee had paid a sum of Rs.81,79,701/- as development fee to Fujitsu Micro Electronics Asia Pvt. Ltd. and another sum of Rs.35,66,698/- as development fee developing Liquid Crystal Display Units. Explanations were sought by Assessing Officer how such claims could be allowed. Its submission was that payments we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... veloped as per its specification and was an essential component in the manufacture of its speedo-meter assemblies. Assessee also produced the agreement it entered with M/s.Fujitsu. Commissioner of Income Tax(Appeals) was appreciative of these contentions. According to him, the payment made by assessee to M/s.Fjuitsu derived it a benefit running up to five years and also ensured supply of required components as per the specification of the assessee. Therefore, as per Commissioner of Income Tax(Appeals), it was like an intellectual property right and resulted in creation of an intangible asset for the assessee. According to him, the manufacturer could not sell these units manufactured as per the specification given by assessee, to any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot considered to be a capital outlay resulting in acquisition of a capital asset, then it had to be allowed as revenue expenditure. Assessing Officer denied claim of revenue expenditure, even though this was requested by assessee during the course of assessment proceedings. Commissioner of Income Tax(Appeals) also did not consider the claim of assessee that the whole of the amount had to be considered as revenue expenditure. In any case, according to him if at all any intangible asset was acquired by assessee through such payment, depreciation had to be allowed and to that extent the order of Commissioner of Income Tax(Appeals) could not be assailed by the Revenue. 6. We have perused the orders of the authorities below and heard the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation under Section 32(1)(ii) of the Act. Insofar as assessee's claim that the whole of the sum ought to have been allowed as revenue expenditure, we are unable to accept. In the first place, assessee itself had treated it as a capital out go and the payment had resulted in creation of a right which could give it royalty income, at least in future. In second place such a claim was never made by filing a revised return. In the original return, assessee had itself claimed only depreciation. We therefore, do not find any reason to interfere with the order of Commissioner of Income Tax(Appeals). 7. In the result, appeal of Revenue as well as Cross objection of assessee are dismissed. Order pronounced in the open court after conclusion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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