2021 (8) TMI 457

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....iture incurred on Research & Development. The action being arbitrary, erroneous and unlawful must be quashed with directions for relief." 3. This appeal was earlier, dismissed by the Tribunal for want of prosecution. Subsequently, the Tribunal, vide MA No. 604/Del/2019, order dated 5th March, 2021, recalled its earlier order. Hence, this is a recalled matter. 4. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacturing of bio-organic manure or Jevik Khad by mixing biodegradable waste, poultry, human waste (sulge), bone powder, sewage waste, etc. It filed its return of income on 01.10.2012 declaring the total income at Rs. 2,37,770/-. During the course of assessment proceedings, the AO noted t....

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....ts claim that the expense qualifies as revenue in nature. On such facts, the expense for Rs. 21,00,000/- are on account of Research and Development, is treated as capital in nature and disallowed. As the assessee has filed inaccurate facts with a view to conceal its income I hold that it is a fit case for initiation of penalty proceedings u/s. 271(1)(c) of the I.T. Act. 1961." 6. In appeal, the ld. CIT(A) sustained the addition made by the AO. 7. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal. 8. The ld. Counsel for the assessee strongly challenged the order of the CIT(A). Referring to para 4.8 and 4.9 of the order of the CIT(A), he submitted that the ld. CIT(A) without going through the various de....

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....f Rs. 21 lakhs claimed by the assessee under the head 'Research & Development expenditure' as capital in nature by holding that it gives an enduring benefit to the assessee. I find, the ld. CIT(A) upheld the action of the AO holding that the assessee did not file any supportive details to verify the claim of expenditure and, therefore, the disallowance was sustained by him. It is the submission of the ld. Counsel that the ld. CIT(A), without going through the details already filed before the AO, made a remark that the assessee has not filed the supportive details. It is his submission that every expenditure which gives enduring benefit cannot be treated as a capital expenditure. Further, the ld. CIT(A) has not gone through the detai....