TaxTMI 
TaxTMI 
2014 (1) TMI 1636
X X X X Extracts X X X X
X X X X Extracts X X X X
....tment's appeal ex-parte qua the assesse-respondent. 2. First we are taking up ITA No. 1171/D/12 for A.Y. 2007-08. 3. The assessee company, in the relevant assessment year, was engaged in the business of industrial activity of manufacture and sale of Harvester Combines which facilitate mechanized harvesting of rice and wheat crops. The assessee company had filed its return of income declaring an income of Rs. 4,67,97,770/-. The assessment was completed at a total income of Rs. 6,68,01,949/- after making following additions/disallowances: a) Deferred revenue expenditure disallowed Rs. 1,98,68,372/-; b) Depreciation on computer peripherals Rs. 1,35,807/-. 4. Ld. CIT(A) allowed the assessee's appeal on both the counts. 4.1 Bei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....low. The expenditure incurred on development of this new product has been claimed by the assessee as a deductible expenditure. The total expense incurred during the year (before the date of commercial launch) on development of this new product was Rs. 142.31 lacs out of which a sum of around Rs. 90 lacs is towards salary itself of the staff involved in the activity of development. Refer Annexure 7 for details of expenses incurred during the year under asstt. In regard to the claim made in tax computation, kindly see para 6 below. The technological feasibility of the new product was established in March 03 with the completion of the details program design and it was expected that the product will be launched by May 1, 2007. Expenses....
X X X X Extracts X X X X
X X X X Extracts X X X X
....8-09, i.e. the year in which the product was expected to be commercially launched. _ In FY 03-04 be claimed over 4 years in such a proportion that the entire expenditure gets claimed over the said period with the last year of the claim being FY 07-08 relevant to AY 08-09, i.e. the year in which the product was expected to be commercially launched. _ In FY 04-05 be claimed over 3 years and 1 month in such a proportion that the entire expenditure gets claimed over a period of 3 years and 1 month with the last year of claim being FY 07-08, i.e. the year in which the product was expected to be commercially launched. _ In FY 05-06 be claimed over 2 years and 1 month in such a proportion that the entire expenditure gets claimed over a pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ess of manufacturing cars. It made payments to automotive research association of India, with a view to bring about improvement in the quality of cards, and to cut repetitive costs. No separate unit was set up to manufacture the new model. It may be stated that in the following case laws the expenditure on development of product has been treated as fully allowable." 6. The AO, however, did not agree with assessee's contentions but ld. CIT(A) allowed the assessee's appeal. 6.1 We have considered the submissions of ld. DR. 6.2 The AO himself observed that the provisions of section 35D were not applicable. Therefore, the only question that remain for consideration is whether the expenditure was incurred in revenue field or capital ....