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TMI Blog2009 (7) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks. However, in the computation filed with the return, entire expenses were claimed as revenue expenses. In the course of assessment proceedings, the assessee had further explained that these expenses were incurred on development of samples etc. and were of revenue nature. 2.1 The Assessing Officer did not accept the claim of the assessee as deferred revenue expenses were to be written off in a period of six years as per books of account. It was further observed that the assessee was following a policy of writing off deferred revenue expenditure in a phased manner over a period of six years. Going by such accounting policy of the assessee, the deferred revenue expenditure incurred on development of samples, according to the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment Corpn. 249 ITR 787 (SC) and on the case of Empire Jute Co.Ltd. vs. CIT 124 ITR 1 (SC). The assessee also explained that expenses on account of sample development have been consistently allowed to it in earlier years. Such details are noted by learned CIT (Appeals) in para 6 of the impugned order. 3.1 The learned CIT (Appeals) allowed the expenses as per the following observations: 3.3.1 I have carefully considered the submissions alongwith the documentary evidence as submitted by the appellant alongwith various case laws. I find that the expenses reflected under the head deferred revenue expenses were incurred on travelling, freight, consumables, salaries, wages and expenses on QS 9000 etc for development of samples which a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iture as incurred which is revenue in nature is to be allowed in the year in which they are incurred/accrued. 3.3.3 It is trite law that revenue expenses are to be allowed in the year in which they are incurred and the AO was not justified in allowing only ₹ 8,12,850/- (1/6th expenses out of the total expenses of ₹ 48,77,109) and disallowing the balance expenditure of ₹ 39,60,000/-. I, therefore, hold that the total expenditure of ₹ 48,77,109/- are allowable as revenue expenses in this year and hence the appellant gets relief of ₹ 39,60,000 3.2 The learned CIT (Appeals), with similar observations, also deleted disallowance of ₹ 88,42,980/- in assessment year 2004-05, vide his order dated 21.08.2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question to the Hon'ble High Court: Whether the Tribunal was right in law in allowing relief of ₹ 15,58,500 in the assessment year under consideration when no such claim was made by the assessee in the return of income? Their Lordship of Delhi High Court, after considering powers of the Tribunal u/s. 254 of the Income-tax Act, in the light of decisions of Supreme Court, further held as under: Further, revenue expenditure which is incurred wholly and exclusively for the purpose of business must be allowed in its entirety in the year in which it is incurred. It cannot be spread over a number of years even if the assessee had written it off in his books over a period of years. Reliance can be placed on Madras Industrial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nefit resulting to a business need not be confined to the year of expenditure and this is an ordinary incident of a running business. It is not possible to agree with Revenue that the advertisement expenses incurred by assessee at the time of installation of additional machinery in existing line of business resulted in any enduring benefit, so as to be treated as capital in nature. Advertisement expenses incurred by assessee to create brand image was therefore, allowable as revenue expenditure. - Empire Jute Co. Ltd. vs. CIT (1980) 17 CTR (SC) 113: (1980) 124 ITR 1 (SC), Alembic Chemical Works Co. Ltd. vs. CIT (1989) 77 CTR (SC) 1: (1989) 177 ITR 377 (SC) and Hindustan Commercial Bank Ltd., In re (1952) 21 ITR 353 (All) relied on; Core Heal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue is not applicable and distinguishable on facts. The Tribunal as fact found, the assessee had carried out extremely heavy repairs and for this reason in the books of account, the expenditure was spread over more than one accounting year . The Tribunal further observed, in the instant case, it is not the case of the assessee that the treatment given by it in the books of account is erroneous. The said case, therefore, was decided on peculiar facts and is not applicable here. 6.1 There is no dispute in the present case that expenditure in question was incurred for development of samples used by the assessee for carrying on its business more effectively and more efficiently. Expenses were incurred for purposes of business. Samples ..... X X X X Extracts X X X X X X X X Extracts X X X X
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