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TMI Blog2012 (11) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... Ms. SUSHMA CHOWLA, JJ. Appellant by: Shri N.K. Saini Respondent by: Shri B.M. Khanna ORDER PER T.R. SOOD, A.M In this appeal the revenue has raised the following grounds: 1 On the facts and circumstances of the case the ld. CIT(A) had erred in giving the relief of Rs. 32,61,829/- on account of interest of Rs. 45,24,042/- on flimsy grounds u/s 36(1)(iii) non charging of interest against sales of Rs. 140,00,000/-. 2. On the facts and circumstances of the case the ld. CIT(A) had erred in giving the relief of Rs. 45,57,784/- on account of disallowance made by the Assessing Officer as the assessee had already having the part on which the assessee sought the expenses incurred on R D account. 3. On the facts and circumstances of the case the ld. CIT(A) had erred in giving the relief of Rs. 4,68,828/- on account of difference in Valuation Stock as there was no explanation provided byteh assessee regarding the under valuation of the closing stock duringthe coruse of assessment proceedings. 4. On the facts and circumstances of the case the ld. CIT(A) had erred in giving the relief of Rs. 1,81,709/- on account of addition made by the Assessing Officer for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... products for foreign market. It was stated that the firm has developed a number of High Tech Products. The assessee was asked to furnish the details of quantity and amount of 14 Pin Double Decker prepared/manufactured in the current year and in the subsequent year as well as the basis of allocation of expenses to R D and complete name and address, designation, salary and qualification of R D staff. . In response vide letter dated 22.8.2009 it was stated as under: The firm is having an in-house R D Unit recognised by the Department of Scientific and Industrial Research Government of India, Ministry of Science and Technology, New Delhi since 1976 (Photocopy of certificate enclosed). The firm is neither having any technical collaboration nor has purchased any technology collaboration nor has purchased any technology from outside. The firm is using its own technology developed in house and has developed a number of state of the art import substitution products for domestic and international market. The firm had received a number of awards as detailed below (photocopies enclosed). The firm has developed a number of Hi Tech Products such as 14 Pin Double Decker, Relay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rima facie acceptance of the in-house R D facilities created by the assessee which should have been honorable accepted by the Assessing Officer. The components or products are manufactured during trial run are supplied to the customers for carrying out the trial run by them on their plant and machinery. After the products are approved, the Tools Dies are capitalized. During the course of audit of NTPC, a rotor which was installed was kept in work in process account and put to trial runs. A committee of experts was constituted which laid down the criteria that rotor should run uninterrupted for 180 days, then only the rotor will be commissioned and on commissioning the rotor was capitalized. During the period of the trial run, there were various interruptions and the machinery had to be stopped and further expenditure were incurred. The assessee is manufacturing the Tools, Dies and fixtures for the development of new products in house. Assessee is debiting the expenditure incurred for the development of Tools and Dies to the capital work in progress account from time to time. The Tools and Dies for the development of new products are developed in the R D department and the qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmally while carrying out the scientific research, a protype is developed, which is forwarded to the prospective buyers for analyzing the product and getting their comments on them. The data collected is analysed and thereafter only the tool of that product is finalized. Sample sales of such protype should not have been concluded by the Assessing Officer that it is sale of commercial productions. If the assessee had technology then the assessee would have sold such goods in a large volume and even in earlier years. He also submitted that similar expenditure is incurred for production of an item of scientific R D was allowed in the earlier years even in the assessment framed u/s 143(3). 12. We have heard the rival submissions carefully and find force in the submissions of the ld. counsel of the assessee. Development of a new product through research is a continuous process because technology is changing very fast with the times. For example in case of a car originally a car was developed about 100 years back but the present day car has come up through research efforts of various organizations in different countries and new models of cars have been introduced in the world because o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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