2016 (2) TMI 1288

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....he appeals are identical and thus, both the appeals can be heard and disposed of together. Ld. D.R. did not object to the aforesaid contention of ld. A.R. We therefore proceed to dispose of both the appeals by a consolidated order and proceed with facts for A.Y. 2007-08. 3. The relevant facts as culled out from the materials on record are as under: At first, we take ITA No.1339/Ahd/2011 (A.Y. 2007-08) 4. The Assessee is a company stated to be engaged in the business of manufacturing of clutch driven plate and clutch cover assembly. The Assessee electronically filed its return of income for A.Y. 07-08 on 30.10.2007 declaring total income of Rs. 15,95,73,507/-. The case was selected for scrutiny and thereafter, the assessment was fra....

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....owhow it is intangible capital in nature." 5. Before us, ld. D.R. submitted that the solitary issue in the ground is with respect to allowability of product development expenses. 6. On perusing the computation of income filed along with return of income, A.O. noticed that assessee has claimed deduction of Rs. 50,07,186/-, being product development expenses which though was treated by it as deferred revenue expenses in the accounts but was claimed as revenue expenditure while computing total income. A.O. was of the view that the expenses were incurred for the purpose of development of new products and therefore, the benefit of the expenditure extended to succeeding years and therefore, the expenditure was capital in nature and could no....

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..... He, therefore, submitted that since there are no change in facts in the year under consideration and since, ld. CIT(A) after considering the decisions cited therein has allowed the appeal of the assessee, no interference to the order of ld. CIT(A) is called for. He, thus, supported the order of ld. CIT(A). 9. We have heard the rival submissions and perused the material on record. In the present case, the issue is about allowability of product development expenses which were held by A.O. be a capital in nature. We find that ld. CIT(A) while deciding the appeal for A.Y. 2002-03 and following it has given a finding that due to incurring of product development expenses, the installation capacity did not increase and assessee did not set up....

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....cies, it is stated that the cost incurred on product development and technical knowhow is accumulated and treated as deferred revenue expenditure. When the cost is accumulated as technical knowhow it is intangible capital in nature." 12. Before us, at the outset, ld. A.R. submitted that the present appeal of the Revenue needs to be dismissed on account of low tax effect in view of the CBDT Circular No. 21 of 2015 dated 10.12.2015. The ld. D.R. fairly admitted that the tax effect is less than the limit prescribed by the aforesaid CBDT Circular. 13. We have heard the rival submissions and perused the material on record. On perusing the grounds of appeal raised by the Revenue, we find that Revenue is aggrieved by the deletion of addition....