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The Tax PublishersITA No. 1735/Ahd/2019 2020 TaxPub(DT) 4159 (Ahd-Trib)INCOME TAX ACT, 1961
Section 37(1)
Where overall analysis of the record would indicate that the assessee had incurred of R&D expenditure for fulfilling the requirement of a specified product required to be supplied to a particular customer and raw- material, tools designs ultimately determined by the assessee and used for manufacture of customised products were not meant for uniform application for other customers also, therefore, the expenditure incurred for development of customized products and manufactured and sold by the assessee need not to be capitalized and were to be treated as revenue expenditure.
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Business expenditure - Capital or revenue expenditure - R&D expenditure incurred for preparing a product specifically required by its customers - Nature of
Assessee claimed expenditure on account of R&D. AO noticed that the said expenditure was incurred for development of new product range as well as valued engineering of existing product ranges and same resulted into enduring benefit to the assessee. He accordingly disallowed the claim of the assessee for revenue expenditure, and treated this expenditure as capital in nature. Held: Overall analysis of the record would indicate that the assessee had incurred this expenditure for fulfilling the requirement of a specified product required to be supplied to a particular customer. Raw material, tools designs ultimately determined by the assessee and used for manufacture of customized products were not meant for uniform application for other customers also, and therefore the expenditure incurred for development of customized products and manufactured and sold by the assessee need not to be capitalized. These were to be treated as revenue expenditure and deserve to be allowed under section 37.
REFERRED :
FAVOUR : In assessee's favour
A.Y. :
INCOME TAX ACT, 1961
Section 35(1)(iv) and 35(2)(ia)
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