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2017 (7) TMI 421 - ITAT DELHI

2017 (7) TMI 421 - ITAT DELHI - TMI - Expenses incurred on market research - revenue expenses - whether expenses not to be amortized u/s 35D(2)(a)(iii) as held by AO? - expenses incurred in connection with extension of its undertaking - Held that:- Bare perusal of the provisions contained u/s 35D invoked by the AO to amortize expenses incurred on market research goes to prove that the expenses must be incurred before commencement of the business or after commencement of the business but where th .....

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nvoke the provisions contained u/s 35D, such expenses are required to be incurred before the commencement of the business or after the commencement of the business in connection with extension of undertaking or in connection with its setting up of a new unit, both these conditions are not fulfilled. So, the expenses cannot be amortized by invoking the provisions contained u/s 35D and ld. CIT (A) has rightly deleted the addition - Decided in favour of assessee. - ITA No. 4336/Del./2014 - Dated:- .....

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r short the Act ) qua the assessment year 2010-11 on the ground that :- On the facts and in the circumstances of the case, the ld. CIT (A) erred in holding that the expenses incurred on market research were revenue expenses and not to be amortized u/s 35D(2)(a)(iii) as held by AO, though the same were incurred in connection with extension of its undertaking as per the details submitted by the assessee during the assessment proceeding. 2. Briefly stated facts of this case are : during the scrutin .....

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at it being expense of enduring nature is being amortized by invoking the provisions contained under section 35D(2)(a)(iii) of Act but allowed the claim of the assessee to tune of 1/5th of the expenses for the five years and assessed the total income at ₹ 53,72,391/-. 3. Assessee carried the matter before the ld. CIT (A) by way of filing the appeal who has allowed the appeal. Feeling aggrieved, the Revenue has come up before the Tribunal by way of filing the present appeal. 4. We have hear .....

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er, we would like to reproduce the provisions contained u/s 35D(2)(a)(iii) of the Act for ready perusal:- 35D. (1) Where an assessee, being an Indian company or a person (other than a company) who is resident in India, incurs, after the 31st day of March, 1970, any expenditure specified in sub-section (2),- (i) before the commencement of his business, or (ii) after the commencement of his business, in connection with the extension of his undertaking or in connection with his setting up a new uni .....

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y expenditure specified in subsection (2), the provisions of this sub-section shall have effect as if for the words "an amount equal to one-tenth of such expenditure for each of the ten successive previous years", the words "an amount equal to onefifth of such expenditure for each of the five successive previous years" had been substituted. (2) The expenditure referred to in sub-section (1) shall be the expenditure specified in any one or more of the following clauses, namely .....

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carried out by the assessee himself or by a concern which is for the time being approved in this behalf by the Board 7. Bare perusal of the provisions contained u/s 35D invoked by the AO to amortize expenses incurred on market research goes to prove that the expenses must be incurred before commencement of the business or after commencement of the business but where there is an extension of undertaking or setting up of a new unit. In the instant case, AO has not made out any case if the assesse .....

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