Addl. CIT vs Setco Automobiles Ltd. Panchmahal
The issue raised by the Revenue is that the CIT-(A) erred in directing to allow the deduction of the Product Development Expenses representing capital expenses, as revenue expenditure in violation of the provisions of Rule 46A of Income Tax Rule. The assessee in the present case is a limited company and engaged in the business of manufacturing of automotive products. The assessee in the year under consideration filed the return of income which was assessed u/s 143(3) r.w.s. 144C(3) after making the addition/disallowance.
The assessee has made a fresh claim before the Learned CIT-(A) which was not made either in the Income tax Return or before the AO during the assessment proceedings. There was no fresh evidences as alleged by the revenue, which were entertained by the Learned CIT-(A) in violation of the provisions of Rule 46A of Income Tax Rule. The ld. DR has not brought anything on record suggesting that there was any benefit of enduring nature or any new assets coming into existence out of such expenses. Accordingly, Ahmedabad ITAT holds that such expenses are of revenue in nature but subject to verification of the AO as held by the CIT-(A). Hence, finding of the CIT-(A) was upheld and, the ground of appeal of the Revenue is dismissed.