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Commissioner of Income Tax-II Versus JCB India Ltd.

[2015] 376 ITR 621 (Del) - Development charges - revenue v/s capital expenditure - Held that:- The Court is satisfied with the explanation offered by the Assessee that it is incurring development charges on research and testing of components and that this does not result in a benefit to it of an enduring nature 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 .....

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ency as explained in Radhasoami Satsang v. CIT (1991 (11)2 - SUPREME Court ) and decline the plea of the Revenue to remand the matter to the AO for a fresh determination. - Decided in favour of assessee. - ITA No. 195/2014, ITA No. 202/2014 - Dated:- 16-7-2015 - S. Muralidhar And Vibhu Bakhru,JJ. For the Appellant : Mr Kamal Sawhney, Senior Standing Counsel with Mr Raghvendra Singh, Junior Standing Counsel For the Respondent : Mr M S Syali, Senior Adv. with Mr Mayank Nagi and Mr Tarun Singh, Adv .....

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arges' 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 Departm .....

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he AO for re-examining the issue afresh after giving the Assessee an opportunity to provide further details. 4. Mr. M.S. Syali, learned Senior counsel for the Assessee, first referred to the order dated 23rd February, 2004 passed by the ITAT in the Assessee's own case for AY 1995-96 in which it was noted that for AY 1993-94 also the ITAT had upheld the order of the CIT (A) deleting the addition made by the AO of the development expenses. Consequently, the addition made of the said head of ex .....

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pointed out that for 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 .....

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ch the present appeals arise, the AO did not hold that the details provided by the Assessee were inadequate. He only opined on the basis of the details furnished that there was a benefit of enduring nature to the Assessee thereby and that, therefore, it required to be treated as a capital expenditure. 7. When the matter went before the Dispute Resolution Panel (DRP), the hearing took place on 19th and 20th September, 2011. The DRP asked for further details from the Assessee which were furnished .....

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