TaxTMI 
TaxTMI 
TaxTMI 
2018 (10) TMI 2054
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....f appeal :- "1. Whether on the facts and circumstances of the case and in Law, the Ld. CIT(A) was correct in directing to allow the Products Registration expenditure of Rs. 39,81,96,235/ - as revenue expenditure. 2. Whether on the facts and the circumstances of the case and in la, the ld. CIT(A) was correct in deleting the depreciation allowed to the assessee on the disallowance of the Products Registration expenditure of Rs. 39,81,96,235/ - as capital expenditure. 3. The appellant prays that the order of the CIT(A) on the grounds be set aside and that of the Assessing Officer be restored 4. The appellant craves leave to add, amend or alter all or any of the grounds of appeal." 2. Briefly stated, the assessee company which is engag....
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....g countries only after completing certain formalities and availing approvals/registrations from the regulatory authorities in the said respective countries. The registrations were termed as "Product Registration" in the books of accounts and were written off over a period of 5 years. Further, once the approval was received by the assessee company, the product registration would be transferred out of capital work in progress to product registration account. It was the contention of the assessee that without obtaining the requisite registrations the sale of the agrochemicals/pesticides would not be possible in the countries to which exports were made. 5. The A.O after deliberations was however not persuaded to subscribe to the aforesaid clai....
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....ase remained the same, the CIT(A) following the view taken by his predecessor, therein held the product registration expenditure of Rs. 39,81,96,235/- as a revenue expenditure in the hands of the assessee. 7. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The Learned Authorized Representative (for short 'A.R') of the assessee, at the very outset of the hearing of the appeal submitted that the only issue involved in the present appeal was as to whether the product registration expenditure was in the nature of a revenue expenditure as claimed by the assessee, or a capital expenditure as held by the A.O. It was submitted by the Ld. A.R that the issue was squarely covered by the ord....
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....ered by the order passed by a coordinate bench of the Tribunal viz. ITAT "F" Bench, Mumbai in the assesses own case for A.Y. 2011-12 and A.Y. 2012-13 i.e. DCIT-13(2)(2), Mumbai Vs. M/s Sharda Worldwide Exports Pvt. Ltd. (now known as Sharda Cropchem Ltd., Mumbai) [ITA No. 3804 & 3805/Mum/2016; dated 16.03.2018]. We find that the Tribunal while disposing off the aforementioned appeals concurred with the view taken by the CIT(A), and had concluded that the product registration expenditure was rightly allowed by him as a revenue expenditure, observing as under : "5.1.1. We find that one of the major objections of the AO was that the assessee was getting enduring benefit by incurring PRE. We have taken note of the fact that assessee is a trad....
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....s been paid in lump sum or by installments, as it does upon the purpose for which the payment has been made and expenditure incurred. It is the real nature and quality of the payment and not the question or the manner of the payment which would prove decisive. If the subject of making the payment is to acquire a capital asset, the payment would partake of the character of a capital payment even though it is made not in lump sum but by installments over a period of time. On the contrary, payment made in the course of and for the purpose of carrying on business or trading activity would be revenue expenditure even though the payment is of a large amount and has not to be made periodically." Respectfully following the above, we hold that to ....
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....le Gujarat High Court has clearly held that PRE had to be allowed as revenue expenditure. We are reproducing the relevant portion of judgment of Cadila Healthcare Ltd. and it reads as follow: "9. With respect to the expenditure incurred for production registration charges, we agree with the view of the Tribunal that the assessee did not acquire any new asset. As per the rules and regulations, it was essential that the product, before marketing, would be registered with the regulating authorities. Any expenditure in the process would not be stated to ensure procurement of a new asset to the assessee. We are informed that a Division Bench of this Court in the case of CIT v. Torrent Pharmaceuticals Ltd, (2013) 263 CTR(Guj)683 :[2013] 87 DTR ....