TMI Blog1993 (7) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... following amounts out of the said deferred revenue expenses as expenses for the three years under consideration : Assessment year 1982-83 : Development expenditure on Cooker Extruder Rs. 22,135 Assessment year 1983-84 : Development expenses relating to : (i) Cooker Extruder Rs. 22,135 (ii) Panel Patching Communication Equipment Rs. 40,989 (iii) Prototype Panel Patching Communication Equipment Rs. 25,536 Assessment year 1984-85 : (i) Cooker Extruder Rs. 22,135 (ii) Panel Patching Communication Equipment Rs. 110,355 (iii) Prototype Panel Patching Communication Equipment Rs. 68,752 The Income-tax Officer discussed the claim of the assessee in this regard in detail in the assessment order for assessment year 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dustan Aluminium Corpn. Ltd. v. CIT [1983] 144 ITR 474 (Cal.) (ii) CIT v. Hind Construction Engg. Co. Ltd. [1984] 147 ITR 513 (Cal.). The CIT(A) himself relied upon tire decision in the case of Hindustan Commercial Bank Ltd. (21 ITR 353) in which the High Court had held that there was no legal jurisdiction for spreading out the revenue expenditure and that the whole amount was deductible in the year in which it had actually been incurred, if it was not in the nature of capital expenditure. In that view, the CIT(A) dismissed the contentions of the assessee and upheld the disallowances as made by the ITO. 2. Before us, the representative of the assessee has claimed that the development expenses were essential to the functioning of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses. He, however, argued that there is no statutory provision about allowing revenue expenses in a deferred or spread out manner. He also emphasised that there was no agreement for claiming the expenses in a phased manner and in the face of these facts, the entire expenses should have been claimed and allowed in the year/years in which such expenses had actually been incurred. 3. On a careful consideration of the facts of the present case and the legal issue involved, we are of the view that the departmental contention is acceptable in principle. Excepting certain specific provisions relating to amortisation of initial expenses in certain cases, there is no other statutory provision for allowing revenue expenses in a phased or spread-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... process of the assessee for the years under consideration and no nexus of such expense with the income of the assessee for these years could be established by the assessee. In that view, therefore, we conclude that so far as the development expenses relating to cooker extruder are concerned, the assessee missed the bus in not claiming the entire expenses in the year in which such expenses were incurred. The fact that part of such expenses were allowed rather illegally in some of the earlier years does not detract from the right of the department to disallow the claim of the assessee in the years under consideration. Hence, so far as this particular item is concerned, we confirm the disallowances for all the three years. 4. The same, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich constitute nothing but a component of the total cost of production of the equipments will have to be allowed against the sale consideration for the year. Therefore, so far as the communication equipments are concerned, we are of the view that although the development expenses relating to such equipments might have been incurred in some earlier year, yet on account of the accounting principles taken recourse to by the assessee relating to treatment of such development expenses corresponding to the equipments actually sold in an year, the development expenses will have to be allowed in the proportionate manner. We, therefore, direct that so far as the Communication Equipments are concerned, the development expenses be allowed in the mann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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