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TMI Blog2005 (1) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of 1/4 of the capitalised amount of Rs. 4,53,128 by the Assessing Officer on the ground that expenses such as stationery, printing, books and periodicals, general expenses, miscellaneous expenses, advertisement expenses, application fee, etc., could not be capitalised is erroneous on the face of the order because these expenses have in fact not been capitalised under this head. In fact these expenses have already been claimed under the deferred revenue expenditure account of Rs. 58,875.27 which has been separately allowed. Similarly the Commissioner of Income-tax (Appeals) and the Appellate Tribunal committed the same mistake by directing disallowance of 25 per cent. Thus the impugned orders being contrary to the facts on record are perv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame was not utilised for bringing into existence the plant/machinery? 3. Whether there was any material to hold that the entire amount of Rs. 4,53,128 sought to be capitalised by the assessee was used for bringing into existence the plant? 4. What is the true nature of various expenditures claimed by the assessee, as specified therein and whether they could be capitalised or could be claimed as deferred revenue expenditure and whether as a fact, the assessee has claimed it and if so, under what head?" The assessee is a private limited company. The assessee is engaged in the business of trading some kind of fabrics and manufacture of ice-cream. The assessment year 1990-91 is i.e., the year in question is the first assessment year after th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable one as capitalisation expenditure towards bringing into existence the asset. In this view, the assessee was granted benefit to the extent of 75 per cent. of Rs. 4,93,128 under the capitalization expenditure whereas the remaining 25 per cent. was refused. Then came an explanation of one entry for Rs. 58,875. The assessee had claimed this entry as deferred revenue expenditure. In the opinion of the Assessing Officer this amount was part of the main entry of Rs. 5,93,128 and since the assessee had not submitted any details to the satisfaction of the Assessing Officer, the assessee was held entitled to the extent of benefit of Rs. 40,000 in place of Rs. 58,875.27. In other words, the Assessing Officer instead of allowing the deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termined only in the manner prescribed in that section and not by any other mode. This principle applies in the facts of this case so far as deduction dealing with the expenditure of Rs. 1 lakh incurred by the assessee for acquiring know how is concerned. Section 35AB of the Act in clear terms provides as to how and in what manner the expenditure incurred by an assessee for acquiring know how is to be allowed as deduction. It is in this section, the Assessing Officer allowed the deduction in relation to Rs. 1 lakh out of Rs. 5,93,128. We cannot find any fault in the approach of the Assessing Officer so far as this expenditure of Rs. 1 lakh is concerned. In our opinion, it was rightly upheld by the Commissioner of Income-tax (Appeals) and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y question of law much less a substantial question of law. Secondly, in the absence of any adequate material, the Assessing Officer had the discretion to grant the benefit to the extent of 75 per cent, and declining to the extent of 25 per cent. Thirdly, it was not the case of the assessee that despite adequate material, the Assessing Officer wrongly declined the benefit to the extent of 25 per cent. Fourthly, it was also not the case of the assessee that the Assessing Officer did not examine the case of the assessee on this issue at all and yet declined to grant the benefit and lastly, the exercise of discretion by the Assessing Officer on this issue which is based on examination of the entire material in support of capitalisation of expen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial question of law of any nature, so as to take note of in this appeal. Secondly, what is sought to be contended does not appear to be so when one peruses the order of the Assessing Officer. Thirdly, the issue in regard to this expenditure whether taken as deferred revenue expenditure or capitalised expenditure was expressly gone into by the Assessing Officer in his order and accordingly benefit to the extent of Rs. 40,000 as deferred revenue expenditure and 75 per cent as capitalised expenditure was extended. This was then upheld up to the Tribunal. In this view, the challenge on this issue really does not survive, as being entirely confusing or misconceived in nature. To conclude, we may say that we went into all the questions raised in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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