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TMI Blog2015 (6) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... to benefit in the capital field particularly in a situation like this where it is an integral part of routine manufacturing and monitoring activity. Viewed thus, the authorities below were clearly in error in holding the development expenses to be capital expenditure. - Decided in favour of assessee. - ITA No. 3762/Del/2013 - - - Dated:- 27-3-2015 - I C Sudhir And Pramod Kumar JJ. For the Appellant : G C Srivastava Sourabh Srivastava, For the Respondent : P Dam Kaunajma ORDER Per: Pramod Kumar: 1. This appeal, filed by the assessee, is directed against the order dated 30th March, 2013 passed by the learned CIT(A) in the matter of assessment under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture for research and testing of equipment, components of the company on a year to year basis. This expenditure debited in this head inter alia includes expenses on:- - Testing the performance of local components (vendor JCB India vis-a-vis similar components used in JCB machines outside India.- Component testing/research to improve performance, import substitution and monitor compliance with prescribed safety standards. - Testing of competitor machines/components to benchmark performance of JCB machines/components 4. This explanation, however, did not impress the Assessing Officer. He proceeded to reject the explanation and disallow the same by rather briefly observing as follows :- The submissions made by the assessee wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In the case of Atherton Vs. British Insulated Helsby Cables Ltd. (1925) 10 Tax Cases 155 (HL), the assessee company claimed to deduct a sum which it had settled upon trust to forma the nucleus of a pension fund for its employees. The House of Lords rejected the claim on the ground that the expenditure was capital in nature. In this case, the following principle was laid down: When an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, there is very good reason. In the absence of special circumstances leading to an opposite conclusion for treating such an expenditure as properly attributable not to revenue but to capital. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trading operations or enabling the management and conduct of the assessee's business to be carried on more efficiently or more profitably while leaving the fixed capital untouched, the expenditure would be on revenue account, even though the advantage may endure for an indefinite future. The test of enduring benefit is, therefore, not a certain or conclusive test and it cannot be applied blindly and mechanically without regard to the particular fats and circumstances of a given case. (iii) What is an outgoing of capital and what is an outgoing on account of revenue depends on what the expenditure is calculated to effect from a practical and business point of view rather than upon the juristic classification of the legal rights, if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts of the case in the light of the applicable legal position. 8. We find that similar disallowance for the assessment year 2007-08 which was the sole basis for impugned disallowance has been deleted by a co-ordinate bench of this Tribunal. Vide order dated 18th September, 2013, and while so deleting the disallowance, the co-ordinate bench has observed as follows:- 15. Ground no.2 of the assessee's appeal is covered in favour of the assessee by the decision of this Bench of the Tribunal in the assessee's own case for the Assessment Year 1996-97, wherein the Tribunal followed its own order for the Assessment Year 1994-95 order dt. 27th December, 2012 and for the Assessment Year 1995-96 vide order dt. 25th Feb., 2004. It was s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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