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2015 (10) TMI 1604 - ITAT KOLKATA

2015 (10) TMI 1604 - ITAT KOLKATA - TMI - Disallowance of expenses of Research & Development - Held that:- Assessee has debited a sum of project expenses written off, which was incurred by the assessee in past years in respect to testing of multi fuel system by Automotive Research Association of India. We find that the AO disallowed the claim in view of specific provision of section 37(1) of the Act by holding that the expenses are not expended wholly and exclusively for the purpose of business .....

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cally admitted that this is a new line of business, which was to be started. According to him, this was on- going process and these expenses are for earning of future income.

We find no substance in the argument of the Ld. counsel for the assessee and the lower authorities have given a concurrent finding that there is no business relating to this project, which is abandoned. In such circumstances, we confirm the orders of the lower authorities and this issue of assessee’s appeal is d .....

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"the Act") for Assessment Year 2006-07 vide his order dated 12.11.2008. 2. The sole issue in this appeal of assessee is against the order of CIT(A) confirming the action of AO in disallowing the expenses of Research & Development. For this, assessee has raised following three grounds: "1. For that under the facts and circumstances of the case the Ld. Assessing Authority and the Ld. Appellate Authority failed and neglected to appreciate the facts and nature of business carried .....

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development work of one equipment for automobile pollution control which is need of the day and the entire expenses so incurred in carrying out the said research work which is an ongoing process till the final approval by the competent authority, is very much in thenature of business expenses and the same is allowable. 3. For that the Ld. Appellate Authority failed to appreciate the submission and documents as was filed by the appellant to substantiate the nature of expenses and the said order i .....

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t;project expenses written off". The AO disallowed in view of specific provision of section 37(1) of the Act by holding that expenses are not expended wholly and exclusively for the purpose of business and hence, not allowable. Aggrieved, assessee preferred appeal before CIT(A), who also confirmed the action of AO by observing as under: "I have carefully considered the submission put forward by the appellant along with the supporting documents furnished, perused the facts of the case i .....

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t expenses written off were incurred by the appellant in past years in connection with the testing of Multi Fuel System by Automotive Research Association of India and therefore not an allowable expenditure in the relevant AY. I agree with the contention of the AO that the appellant had no business activity in past years or in the relevant year which can be said to be related to "Multi Fuel System" and the claim of expenditure is disallowable. Therefore, it is seen that the AO has disa .....

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