TaxTMI 
TaxTMI 
2012 (11) TMI 95
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....ng the under valuation of the closing stock duringthe coruse of assessment proceedings. 4. On the facts and circumstances of the case the ld. CIT(A) had erred in giving the relief of Rs. 1,81,709/- on account of addition made by the Assessing Officer for non deposing the amount in their respective account on or before the due date." 2. Ground No. 1 - After hearing both the parties we find that the Assessing Officer had originally disallowed a sum of Rs. 45,24,042/- out of interest paid u/s 36(1)(iii) of the Act because the same was not for business purposes as the assessee had given interest free advances amounting to Rs. 1.20 crores to its sister concerns. 3. On appeal the ld. CIT(A) gave relief amounting to Rs. 32,61,829/- and confirmed the balance disallowance. 4. The assessee as well as the revenue filed appeals before the Tribunal. Somehow the assessee's appeal was heard and the objections of the assessee were set aside to the file of Assessing Officer for reworking of the disallowance. In pursuance of the order of the Tribunal and also after considiering the decision of Hon'ble Punjab & Haryana High Court in Abhishek Industries (Supra) the Assessing Officer....
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....ate of the art import substitution products for domestic and international market. The firm had received a number of awards as detailed below (photocopies enclosed). ................................. The firm has developed a number of Hi Tech Products such as 14 Pin Double Decker, Relay Socket, 48 x 96 penal meter, 23 way 2mm male and female connector, proximity sensor, low profile box headers, power supply, Digital Timers & close type terminal strips etc. for exports and domestic market. Copy of the Catalog is enclosed. The capital items purchased during the year are for R&D use only and not for regular production. The firm has incurred capital expenditure of Rs. 45,57,784/- for the purchase of equipment/tools and revenue expenditure of Rs. 2,43,44,861/- on payment of wages, salary and purchase of raw material/components. Details of expenditure are enclosed." The Assessing Officer made further inquiries and found that bills for purchase of items for Research and Development were received in the months of February and March, 2007. On verification of sales he found that the assessee had already sold similar items which were said to have been developed on 1.7.2006 to M/s Has....
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....and fixtures for the development of new products in house. Assessee is debiting the expenditure incurred for the development of Tools and Dies to the capital work in progress account from time to time. The Tools and Dies for the development of new products are developed in the R&D department and the quantities of the products produced during trial runs are dispatched to customers for their response regarding quality, specifications and market acceptability. After the final approval of the products from the customers commercial production is started and the tools and the dies used for R&D are charged to Research & Development. Bills of sales during trial and sales made in the subsequent year are enclosed. Sale of trial products and later subsequent capitalization of the expenditure under R&D cannot lead to a negative conclusion as drawn by the Assessing Officer." 9. The ld. CIT(A) found force in the submissions of the assessee and was of the opinion that since the assessee was having recognised R&D unit and was recognised by the Department of Scientific and Industrial Research and the assessee has carried out the some research activities, therefore, the claim was allowed. 10. ....
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....because technology is changing very fast with the times. For example in case of a car originally a car was developed about 100 years back but the present day car has come up through research efforts of various organizations in different countries and new models of cars have been introduced in the world because of such research efforts. Research is still going on to find out to develop new models of cars which can run for example, other fuels than petrol products or which are less pollutant and fuel efficient. Therefore, it is clear that research is a continuous process. Even if the assessee had developed some protype Pin Double Decker they may still require further improvements. Mere selling of protype of production would not show that the assessee already had the technology of the same production.. Therefore, in our opinion, the ld. CIT(A) has correctly decided this issue in favour of the assessee particularly by observing that R&D is a long process. Therefore, we find nothing wrong in the order and confirm the same. 13 Ground No. 3 - After hearing both the parties we find that during assessment proceedings the Assessing Officer noticed from the valuation of closing stock furni....