TaxTMI 
TaxTMI 
2023 (6) TMI 727
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....s and in circumstances of the case and in law, the Ld.CIT(A) has erred in law and on facts in deleting the addition of Rs. 4,90,45,701/- on account of production development expenses. 2. Briefly stated facts are that the assessee in the present case is a limited company and engaged in the business of manufacturing of HDPE/PP jumbo bags and trading of HDPE granules woven bags. The assessee in the year under consideration has claimed deduction amount of Rs. 4,90,45,701/- representing production development expenses which was treated as capital in nature by the AO by observing as under: 8.3 The reply of the assessee has been considered carefully. The same is found not acceptable. On verification of details submitted by the assessee....
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....fore the Ld. CIT(A) who deleted the same by observing as under: 9.2 I have carefully considered the rival contention as well as the observation of the A.O. It is observed that the A.O has made an addition of Rs. 4,90,80,050/- on account of disallowance of product development expenditure being treated as capital expenditure. I find that on identical facts, the appellant's appeal on this ground has been decided in its favour for the A.Y. 2013-14 vide order No.CIT(A)- 9/117/DCIT.Cir-3(1)(1)/15-16 dated 13/01/2017 wherein the ld.CIT(A) has held as under: 9.4 I have carefully considered the rival contention as well as the observation of the A.O. It is observed that the A.O has made an addition of Rs. 5,31,82,295 on account of d....
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....ucts by adopting the formula of yield and wastage. Accordingly, the auditors have hypothetically calculated the quantum of Rs. 5,31,82,295/- out of the total cost incurred relating to raw material consumption, labour cost and power and fuel in respect of R & D activities. It is further submitted that in the statement of income it has claimed the said amount as revenue expenditure by deducting the same from the net profit as per audited P&L A/C, and at the same time adding back the 20% of such expenses return back aggregating Rs. 6,31,80,619/-. Thus, according to appellant by treating the capitalized R & D expenses as revenue expenses and at the same time adding back the amortized amount debited to P & L A/C. it has stated its income at Rs. ....
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....ot claimed in double deduction in respect of the said expenses. According to appellant although the amount amortized in the books is different from the amount claimed as deduction, it has neither written off the product development expenses in AY 2016-17 nor claimed the same as deduction in furnishing the return of income for A. Y.2016-17. Considering all these facts I disagree with the A. O for the reason that although the appellant has treated the capitalized R & D expenses as revenue expenditure, but at the same time it has added back the amortized amount debited to P & L A/C This has resulted into the income of Rs 99,98,324/- Further neither during the remand proceedings or the assessment proceedings the A.O has ever questioned the genu....
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....nt amortized in the books is different from the amount claimed as deduction it has neither written off the product development expenses in A. Y. 2016-17 nor claimed the same as deduction in furnishing the return of income for A.Y. 2016-10- Though the appellant has treated the capitalized R & D expenses as revenue expenses and at the same time it has added back the amortized amount debited to P & L Account resulting into income of Rs. 99,98,324/- as it appears from the record. Further that in the earlier Assessment Years the identical claim of product development expenses was allowed as revenue expenses. Therefore, taking into consideration the entire aspect of the matter the of such addition of Rs. 5,31,82,295/- on account of capital expend....