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TMI Blog2010 (1) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... modification of existing products/developments of new products with the asset under the same management, with the same work force and expertise. It also observed that the revenue did not ever doubt that the expenditure was exclusively and wholly for the purpose of business. The Tribunal accepted the approach adopted by Commissioner (Appeals). Held that- findings of the Tribunal that the expenditure incurred was revenue expenditure and/or for business purpose, had not been challenged, nor was there any challenge to the finding that no capital asset come into existence. Further held that Tribunal had remanded the matter on account of bed debts write off Rs. 10,72,917 to the file of the Assessing officer with a direction to adjudicate the same afresh. Thus the issue was yet to be finally determined and whenever it was finally determined the aggrieved party would be entitled to avail of remedies in accordance with law. - ITA - 77 of 2009 (O&M) and 17 of 2009 - - - Dated:- 22-1-2010 - M. M. KUMAR and JITENDRA CHOUHAN JJ. Ms. Urvashi Dhugga for the appellant. Sanjay Bansal with Ms. Shaveta Maihotra for the respondent. JUDGMENT The judgment of the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax (Appeals) recorded a finding that the return filed by the assessee-respondent on October 29, 2001, was revised on January 28, 2003. The assessee-respondent had initially declared total income of Rs. 40, 20,690. In the revised return it was claimed that the assessee suffered loss of Rs. 32, 39,614. The principal reason for revising the return was that in the original return it could not claim expenses debited under the head "Capital work-in-progress", which have been duly claimed in the revised return. The case was selected for scrutiny. The assessment was completed as already noticed in the preceding paragraph. The Assessing Officer has taken the view that in the original return the assessee had identified Rs. 72.60 lakhs for diversification and expansion of new product range including acquisition of machinery to aid such expansion. On account of the aforesaid notings to the annual accounts, the Assessing Officer concluded that the expenditure related to new projects and is of capital nature because the assessee itself was treating it to be capital expenditure. 4. The Commissioner of Income-tax (Appeals) noticed that details of 32 items were mentioned in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'ble Supreme Court has held that whereas in the capital field it would be only that the expenditure would be disallowable on an application on the tests, where expenditure has been incurred for obtaining an advantage of enduring benefit ; but whereas the expenditure is incurred for obtaining an advantage of enduring benefit on revenue account, the position will be different, i.e., if the advantage consists merely in facilitating the assessee's trading operations or enabling it to carry on the business to be carried out more efficiently or more profitably while leaving the fixed assets untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. Looking from this angle, the expenditure incurred by the assessee was with a view to earn more profits, while leaving its fixed capital untouched. It is further that in some of the items the project has been abandoned also and some were even completed or continued and, therefore, although the assessee intended to obtain an advantage of enduring benefit and it was in the revenue field. This contention of the learned counsel carries force and, therefore, the expenditure has to be catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by giving a note in its original return that it was an expenditure pertaining to new project and is of capital in nature, the Assessing Officer could not have treated the same as the capital expenditure. Moreover, when the Commissioner of Income-tax (Appeals) asked for the comments of the Assessing Officer, he did not comment on the nature of the expenditure incurred nor commented on the treatment of the accounting entries in the books of account. The Assessing Officer simply placed reliance on the note given by the assessee-respondent in its original return, which has been regarded as insufficient. Moreover, under section 139(5) of the Act, the assessee-respondent was entitled to file the revised return rectifying the error committed in showing the expenditure. Moreover, the finding of the Tribunal that the expenditure incurred was revenue expenditure and/or for business purpose, has not been challenged, nor is there any challenge to the finding that no capital asset has come into existence. The Tribunal has recorded in paragraph 4 of its order that the Revenue did not ever doubt that the expenditure incurred was exclusively and wholly for the purpose of business. In that rega ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mental representative along with the counsel for the assessee had submitted to the Tribunal that the matter should be restored back to the file of the Assessing Officer. It is not, thus, open to the Revenue now to urge that a substantive question of law would arise and accordingly the same be adjudicated by this court. Moreover, the issue is yet to be finally determined and whenever it is finally determined the aggrieved party would be entitled to avail of remedies in accordance with law. In that regard reliance may be placed on the observation made by a Division Bench of this court (of which one of us, M. M. Kumar J. was a member) in paragraph 5 of the judgment rendered in the case of Punjab Small Industries and Export Corporation Limited v. Deputy CIT [2007] 171 Taxman 312; [2009] 316 ITR 239. The Division Bench has observed that once the matter has only been remanded back to the Assessing officer for fresh determination then the issue cannot be considered to have been finally determined and after determination it would remain open to the parties to avail of the remedies in accordance with law. Therefore, we do not find any reason to adjudicate on the second question at this s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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