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TMI Blog2019 (3) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... en incurred by assessee to improve the existing products. As relying on BEHR INDIA LIMITED case [2017 (4) TMI 1261 - ITAT PUNE] no infirmity in the decision of CIT(A) in holding the expenditure on product development on revenue account. - decided against revenue. - ITA No.904/PUN/2018 - - - Dated:- 16-1-2019 - Shri Vikas Awasthy, JM For the Assessee : Shri Suhas Bora. For the Revenue : Shri M.K. Verma. ORDER PER VIKAS AWASTHY, JM : This appeal by the Department is directed against the order of Commissioner of Income Tax (Appeals) 6, Pune dated 09.02.2018 for the assessment year 2013-14. 2. The brief facts of the case as emanating from records are: the assessee is a partnership firm engaged in manufacturi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case and in law, the Ld CIT{A} was justified in holding product development expenses as revenue expenditure when the bill wise nature of expenses shows that the product development expenditure conferred enduring benefit to the assessee? 3. Whether on the facts and circumstances of the case the Ld . CIT(A) erred in inferring that the expenditure was incurred to bring in improvisation improvement in the product manufactured by the assessee by making changes at the same time r emain i ng pr i ce competitive? 4. Whether on the facts and circumstances of the case the Ld.CIT(A) was justified in not appreciating that the final outcome of the assessee is definitely of enduring nature in sustenance of the product / de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urred expenditure only for development of existing products and not or new line of business or new products. The ld.A.R. vehemently defended the order of CIT(A) and prayed for dismissing the appeal of Revenue. In support of his contentions, the ld.A.R. placed reliance on following decisions : 1. Amar Raja Batteries Ltd. Vs. ACIT 91 ITD 280. 2. JCIT Vs. Modi Olivetti Ltd. 4 SOT 859 (Delhi). 3. ACIT Vs. Medicamen Biotech Ltd. 1 SOT 347 (Delhi). 4. Hero Honda Motors Ltd. Vs. JCIT 3 SOT 572 (Delhi). 5. Charak Pharmaceuticals Vs. JCIT 4SOT 393. 6. Madras Industrial Investment Ltd. Vs. CIT 225 ITR 802. 7. Kedatnath Jute Manufacturing Co Ltd. Vs. CIT 82 ITR 363 SC. 5. Shri M.K. Verma representing the Department submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the automotive industries. The assessee in order to test the validation of the product incurred expenditure on a regular basis to bring in improvisation and modifications in the product as per the requirements of the customers. The said exercise was carried out by the assessee in order to test the market suitability of the products wherein the products were sent to Germany in order to test its validation, since, the final product was being sold to AE. In the first round of assessment proceedings the said expenditure was connected with the expenditure incurred in the first year of commencement of business on product development and hence, the expenditure was held to be capital in nature. However, where expenditure on testing of the produ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the present case. Upholding the order of CIT(A), we dismiss the grounds of appeal raised by the Revenue. We find that the ratio laid down by the Co-ordinate Bench of the Tribunal squarely applies on the facts of the present case. Thus, in view of the above, we do not find any infirmity in the decision of Ld.CIT(A) in holding the product development expenditure as revenue. I find that the ratio laid down in the case of Behr India Ltd., (supra) squarely applies on the facts of the present case. Thus, in view of the above, I do not find any infirmity in the decision of CIT(A) in holding the expenditure on product development on revenue account. 8. The ld.D.R. has placed reliance on the decision of Torrent Pharmaceuticals Ltd., Vs. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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