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TMI Blog2011 (7) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... lied on the decision of the hon'ble jurisdictional High Court in the case of Rane (Madras) Ltd. [ 2007 (6) TMI 25 - HIGH COURT, MADRAS] the assessee was an existing manufacturer of permanent magnets is clear from the assessment order and this is mentioned at SI. No. 9 of the facing sheet of the assessment order. Therefore, the assessee was introducing only a new product in the same line of business that it was already engaged in and hence, the amount had to be allowed as revenue expenditure. In these circumstances, we do not find any merit in the appeal filed by the Revenue. - Order The order of the Bench was delivered by Abraham P. George (Accountant Member).-In this appeal filed by the Revenue, its grievance is that the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impressed. As per the Assessing Officer, the assessee itself having shown such expenditure under the head "Pre-production expenses" and having capitalised it as a part of miscella- neous expenses in its balance sheet, could not claim it as revenue outgoes. In the opinion of the learned Assessing Officer such expenditure could be considered for amortised allowance as specified in section 35D of the Act. He, therefore disallowed the claim. Before the Commissioner of Income-tax (Appeals), the assessee in its appeal, submitted that the expenditure was for development of a new pro- duct in the same line of business that the assessee was already engaged in. As per the assessee, the new product, namely "bonded permanent mag- net", though it used ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account and for tax purpose. Now, before us, the learned Departmental representative assailing the order of the Commissioner of Income-tax (Appeals) submitted that some part of expenditure comprised of royalty purchased from one M/s. Max Bsermann GmbH. As per the learned Departmental representative, the expenditure for introduction of a new product, incurred during the pre- production stage, could only be considered as capital expenditure. Further submission was that only on start of commercial operation, could any expenditure, even if it was recurring nature be allowed to an assessee. Per contra the learned authorised representative supported the order of the Commissioner of Income-tax (Appeals) and also relied on decision of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come-tax (Appeals) in his order would be very relevant. For brevity, this is reproduced hereunder (page 463) : "Once there is no difficulty to reach a conclusion that the product remains one and the same, viz., steering gears, we do not hesitate to hold that the industry set up at Pondicherry is nothing but an exten- sion of the existing industries at Velachery and Mysore and the deduction claimed by the assessee with regard to the expenditure incurred in connection with the new unit at Pondicherry, even though it is independent, because of the interconnection of management, financial, administrative and production aspects, such expenditure has to be construed as revenue in nature and therefore, deductible, vide the decisions of the Karna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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