TMI Blog2022 (5) TMI 1222X X X X Extracts X X X X X X X X Extracts X X X X ..... d productively. The Hon'ble Supreme Court in the case of (i) Empire Jute Co. Ltd. [ 1980 (5) TMI 1 - SUPREME COURT] and (ii) Alembic Chemical Works Co. Ltd. [ 1980 (5) TMI 1 - SUPREME COURT] held that expenditure incurred on the existing business incurred in connection with the existing business. Updating existing products should be allowed as revenue expenditure. Expenditure was incurred only up-gradation of existing products, we are of the considered opinion that the expenditure is not in the nature of capital but revenue expenditure. Accordingly, we direct the Assessing Officer to allow the expenditure as revenue nature. Accordingly, this ground of appeal filed by the assessee stands allowed. - ITA No. 624/PUN/2018 - - - Dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Learned CIT A failed to appreciate the attendant facts and judicial precedent in appellant's own case in that regard. It is prayed that the disallowance be deleted. 4. The issue in the present appeal relates to the allowability of the expenditure claimed as product development expenses of Rs. 1,42,39,571/- as revenue expenditure. The factual background of the case is as under:- During the previous year relevant to the assessment year under consideration, the appellant company incurred a sum of Rs. 1,42,39,571/- as product development expenses. The nature of the expenditure was explained by the appellant company before the Assessing Officer that the appellant is in the business of manufacture and sale of air conditionin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure no new assets had been brought into existence. The expenditure is only incurred in improving the present products. It is also submitted that in the earlier years for the assessment years 2001-02 to 2009-10, the issue was decided in favour of the assessee company by the Coordinate Bench of this Tribunal. 7. On the other hand, ld. CIT-DR submitted that the expenditure in question was incurred only on new products and the same cannot be allowed as revenue expenditure. 8. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to whether or not the expenditure incurred on testing and validation of the products is capital in nature. During the previous year relevant to the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Ltd., 52 taxmann.com 513 (Kar.), the Hon'ble Supreme Court in the cases referred supra held as under:- Having regard to the facts of this case, the expenditure that is claimed is for upgrading the existing product. Therefore, the product so upgraded goes on changing as time progresses, keeping in mind the requirement and the competition in the market. The Tribunal rightly held that the expenditure is not in the nature of capital expenditure but is revenue expenditure. Therefore, the first substantial question of law is answered in favour of the assessee and against the revenue. 9. In the light of legal position discussed above, having regard to the facts of the case that the expenditure was incurred only up-gradation of exis ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
