TaxTMI 
TaxTMI 
2014 (3) TMI 1188
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....tc. During the year the assessee company has done both export sales as well as domestic sales. 3. The A.O. in his order u/s.143 (3) dated 29.12.2009 made a disallowance u/s.14A by applying Rule 8D. Further he disallowed the claim of product development expenditure on the ground that only one third of the expenses in question is allowable in each Assessment Year and the balance would be allowed in the next two years, as the expenses in question have to be treated as deferred revenue expenditure. He also made an addition of Rs. 1,30.000/- on the ground that foreign exchange is not realized and to that extent the exemption u/s. 10B is to be adjusted. 3.1. Aggrieved the assessee carried the matter in appeal. The first appellate authority ....
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....f the Ld.CIT(A) on this count is hereby upheld. 6. On the issue of quantity of disallowance u/s 14A, we find that the Ld. CIT(A) has relied on the decision of his predecessor in the assessee`s own case for the AY 2006-07. It is brought to our notice that the "F" Bench of the Tribunal in ITA 3864/Del/09 vide order dt. 22.10.2010 has upheld the decision of the Ld.CIT(A) for the AY 2006-07. Thus, we find no infirmity in the order of the Ld.CIT(A). The Ld. DR relied on certain Tribunal decisions, but could not controvert the factual findings of the Ld. CIT(A) which was upheld by the I.T.A.T. in the earlier Assessment Year. The assessee had disallowed an amount of Rs. 4,06,203/- u/s.14A of the Act. The AO has not given any reasons as to why t....
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....tricted to the cases of debentures." "13. At this stage, it would be of advantage to discuss the judgment of Supreme Court in Empire Jute [1980] 124 ITR 1 (SC)which repelled the theory of expenditure of enduring nature, in a great measure. In that case, the Supreme Court noted that by decided cases, the courts evolved various tests for distinguishing between the capital and revenue expenditure but no test is paramount or conclusive. Every case has to be decided on its facts keeping in mind the broad picture of whole operation in respect of which the expenditure has been incurred. At the same time, a few tests formulated by the courts were taken note of. One such test which was specifically spelled out and may be relevant for our pu....
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....ed blindly and mechanically without regard to the particular facts and circumstances of a given case." Applying the aforesaid principle to the facts of this case, it clearly emerges that the expenditure on publicity and advertisement is to be treated as revenue in nature allowable fully in the year in which it was incurred. Concededly, there is no advantage which has accrued to the assessee in the capital field. The expenditure was incurred to facilitate the assessee's trading operations. No fixed capital was created by this expenditure. We may also add here that in the income tax law, there is no concept of deferred revenue expenditure. Once the assessee claims the deduction for the whole amount of such expenditure, even in t....
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....evenue nature and for this purpose reliance has been placed on the decision of the Apex Court in the case of CIT vs.Finlay Mills Ltd. 20 ITR 475. This finding has not been challenged by the Ld.D.R. Therefore, it is held that the Ld.Commissioner of Income Tax (Appeals) was right in allowing the whole of the expenditure." 7.3. This decision has been upheld by the Hon`ble Delhi High Court in the case of CIT vs. M/s Panacea Biotech Ltd. in ITA 22/2012 and ITA 24/2012 vide judgement dated 17.01.2012. 7.4. Applying the propositions laid down in these case laws, to the facts of this case, we find that the undisputed fact is that the expenditure in question is incurred for preparation of samples as per requirement of foreign buyers. The asses....
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.... expenses ;especially when the Assessing Officer has not made out any case that these expenses are either bogus in nature and/or capital in nature. Reference can be made to the case law of CIT vs.Harig Crank Shafts Ltd. 207 Taxation 737 (Delhi) where the Jursidictional High Court held that the product development expenses were deductible as revenue expenditure. In the case of Glaxo Smith Kline Consumer Healthcare Ltd. vs. ACIT 112 TTJ 94 (Chd.), the ITAT even held that the "expenses incurred for introducing and developing new products of the same business were allowable as business expenses, since no new line of business was acquired." Reference can also be made to the case law of CIT vs.Bharat Earth Movers Ltd. (1986) 155 ITR 321 (Kar....