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TMI Blog2018 (5) TMI 1173X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2,70,05,729/incurred as product development expenses, as revenue deduction? B. Whether the Appellate Tribunal has seriously red in law and on facts in not appreciating that the produce development expenses amounting to Rs. 2,70,05,729/gave enduring benefits to the assessee and hence was capital expenditure in nature?" 2. Brief facts are as under. 3. We are concerned with the assessment year 2001-02. The respondent assessee is a company registered under the Companies Act and is engaged in the business of manufacturing of textiles. For the said assessment year, the assessee had filed the return of income on 30.10.2001 declaring loss. The assessee had expended a sum of Rs. 2.70 crores (rounded off) for project development and claime ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Empire Jute Co. Ltd vs Commissioner of Income Tax reported in [1980] 124 ITR 1 contended that the enduring nature test in a given case may break down if it is found that the advantage is in the commercial sense and not in the capital field. Assessee also relied on the judgment of the Supreme Court in case of Alembic Chemical Works Co. Ltd. v. CTT reported in [1989] 177 ITR 377 (SC). The Commissioner of Income Tax (Appeals) however, was not convinced. He was of the opinion that the expense incurred was with respect to development of product and it cannot be denied that such expenditure would not result into enduring benefit. He therefore confirmed the view of the Assessing Officer. 6. The assessee carried the matter in appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture. 9. In case of Commissioner of Incometax, Faridabad v. Escorts Auto Components Ltd. reported in [2011] 197 TAXMAN 42 (Punj & Har.), Division Bench of Punjab and Haryana High Court considered the expenditure by the assessee for modification of existing products/development of new products under the same management with the same workforce and expertise. The Court held that the expenditure incurred, by no stretch of imagination, can be regarded as capital expenditure. 10. In case of Commissioner of Incometax, Bangalore v. Tejas Networks India (P.) Ltd. reported in [2014] 52 taxmann.com 513 (Karnataka), Division Bench of Karnataka High Court considered a case where the assessee was engaged in the business of dealing and selling optical ..... X X X X Extracts X X X X X X X X Extracts X X X X
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