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TMI Blog2020 (9) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessee. The redesigning of the moulds to create new designs of the components manufactured by the Assessee, to the satisfaction of the customer M/s. Hyundai Motors is nothing but 'Revenue Expenditure' incurred in the ordinary course of business of the Assessee. Therefore, finding of the CIT (Appeals) as well as the Tribunal are findings of fact, which cannot be said to be wrong or perverse in any manner. No substantial question of law. - Tax Case (Appeal) No. 11 of 2017 - - - Dated:- 16-9-2020 - THE HON'BLE DR.JUSTICE VINEET KOTHARI And THE HON'BLE MR.JUSTICE KRISHNAN RAMASAMY For the Appellant : Mr.T.R.Senthil Kumar For the Respondent : Mr.Karthik Ranganathan, Senior Standing Counsel JUDGMENT (Delivered by DR.VINEET KOTHARI, J.) The Revenue has preferred this appeal, under Section 260A of the Income Tax Act, arising from the order of the learned Income Tax Appellate Tribunal, Madras D Bench 2. The following purported substantial questions of law are raised in this appeal for our consideration :- 1.Whether on the facts and in the circumstances of the case in law the Appellate Tribunal was right in confirming the order of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the submissions of the assessee, CIT (A) discussed the issue at length and directed the AO to allow the said expenditure as an allowable revenue expenditure. Paras 4S and its sub-paras are relevant in this regard. Aggrieved with the said decision of the CIT (A), Revenue is in appeal before the Tribunal. 10. During the proceedings before the Tribunal, Ld DR for the Revenue relied on the order of the AO. 11. On the other hand, Ld Counsel for the assessee heavily relied on the order of the CIT (A) and reiterated the submissions made before the Lower authorities. 12. After hearing both the parties and on perusal of the orders of the Revenue Authorities in general and decision of the CIT (A) vide paras 4.5 and its sub-paras are relevant in this regard. Considering the significance of the said paras for the sake of completeness of this order, we extract the relevant para 4.5.11 of the impugned order for the AY 2007-2008 as under: 4.5.11. Therefore, the above product perfection expenses , which are classified by the assessee as scientific expenses in its books, are essentially revenue expenses incurred by the assessee during the regular course of the existi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure. 4.5.7 In the field of automobile industry the designs and the models of the cars are fast changing. Consequently, the components required for their manufacture also keep on changing frequently. Hence, the customers keep on requesting the assessee for manufacture and supply of components as per the new designs and specifications. And, for every new design and specification, the assessee has to modify and make necessary changes in its plant and machinery (like moulds etc.) and manufacture the components on trial and supply for quality approval. Only after such approval, the assessee can go for commercial production of the components. 4.5.8 The above process is a continuous process and the assessee has to undertake it for each and every new component/ specification ordered by the customers. These expenses are incurred during the ordinary course of business and for running the business. All the components i.e. newly designed ones as well as the old (already under commercial manufacturing) ones are manufactured from the same factory and by using the same plant and machinery. The only difference is in the designing of certain moulds etc. which are product (component) spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the head income from business . The Assessing Officer is directed to allow the above expenditure of ₹ 11,24,32,995/ as an allowable revenue expenditure. The assessee succeeds in its appeals in this regard. 6. The learned Counsel for the Revenue Mr.Karthik Ranganathan urged before us that though the Assessee could not satisfy the conditions for claiming the said expenditure as Scientific Research Expenditure under Section 35 of the Act, as neither the project was approved by the Competent Authority, as required under Section 35 of the Act, nor the payment in question was made to any approved organization for research purposes. But even if such expenditure was also to be allowed as a Business Expenditure under the residuary provisions of Section 37 of the Act, the matter was required to be examined again by the learned Assessing Authority as the sum of ₹ 11,24,32,995/- might have included the replacement of plant and machinery of capital nature and it required investigation and since such investigation was made earlier by the Assessing Authority while disallowing the said expenditure under Section 35 of the Act, the matter deserves to be remanded back to the As ..... X X X X Extracts X X X X X X X X Extracts X X X X
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