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TMI Blog2015 (7) TMI 996X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax Appellate Tribunal ('ITAT'). The question answered by the ITAT in the said impugned order in favour of the Assessee was whether the addition made by the Assessing Officer ('AO') of the 'development charges' claimed by the Assessee to be revenue expenditure was justified. The case of the Revenue is that the said 'development charges' were in the nature of capital expenditure as the Assessee was thereby deriving benefit of an enduring nature. 2. In the impugned order, the ITAT has deleted the addition on the ground that in several previous AYs the plea of the Assessee that it was revenue expenditure was accepted. 3. Mr. Kamal Sawhney, learned Senior Standing counsel for the Department, submits that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the subsequent AY 2009-10, the AO has accepted the explanation offered by the Assessee and allowed the development charges as revenue expenditure. 5. The consistent explanation that has been offered by the AO in the years in which development expenses/charges was allowed as revenue expenditure is that it is a nomenclature for 'routine expenditure for research and testing of equipment, components of the company on a year to year basis'. According to the Assessee, the expenditure under the said head, inter alia, includes expenses on: "Testing the performance of local components (vendor and JCB India vis-a-vis similar components used in JCB machines outside India. Component testing/research to improve performance, import substitut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re so as to characterise the development charges as capital expenditure. The Court is of the view that testing of products and components is essentially a continuous process which permeates different accounting years. It is an integral part of a routine manufacturing and monitoring activity. It cannot obviously be a one-time event. 9. The Revenue has not been able to persuade the Court that an error has been committed in any of the previous AYs where the Assessee's explanation was accepted and the expenditure on development charges was treated as revenue expenditure. In the facts and circumstances of the case, the Court is additionally persuaded to adopt the rule of consistency as explained in Radhasoami Satsang v. CIT (1992) 193 ITR 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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