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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 ..... sideration :- "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 CIT Appeals without adjudicating specific Grounds of Appeal 3.2 to 3.6 raised before it, which is perverse in nature and liable to be set aside ? 2.Whether on the facts and in the circumstances of the case and in law the Appellate Tribunal was right in deletion of the disallowance made on account of scientific expenses in the absence of assessee furnishing any proof for having paid the sum to a research association, which has as its object the undertaking of scientific research or to a university, college or other institutions to be used for scientific research?" 3.Whether on the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority nor the amount was paid to any university or research organization and hence not eligible for deduction u/s 35(1)(ii) of the Act and disallowed the said amount. Matter was carried to be in appellate authority. During the first appellate proceedings, after considering 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5 The next claim of the assessee is that though the above amount was claimed under the head 'scientitic expenditure', it was actually regular revenue expenditure incurred by the Assessee in respect of product perfection process. As explained by the assessee, the company is manufacturing various parts of automobile components required by Hyundai Motors etc. As per the models and specifications given by them, the assessee has to manufacture and supply the automobile components. Since these components are high precision required in car manufacturing, the Assessee has to first produce them on trial basis and supply to the Hyndai Motors etc. for their quality checking and approval. If they are not upto their satisfaction and specifications, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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) specific. Since the major plant and machinery are used for manufacturing the new components as well as the old components, the production of new components (specification) cannot even be considered as new line of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks, are essentially revenue expenses incurred by the assessee during the regular course of the existing business of 'automobile component manufacturing'. Hence, these expenses are allowable as normal business expenses, for the purpose of computing the taxable income under the head 'income from business'. The Assessing Officer is directed to allow the above expenditure of Rs. 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y question of law, requiring consideration of this Court. 8. Having heard the learned Counsel for the parties, and having gone through the orders of the two authorities as quoted above, and having perused the details of the expenditure incurred to the extent of Rs. 11,24,32,995/-, we are satisfied that no question of law arises in the appeal filed by the Revenue. 9. The Assessee gave up its claim of deduction under Section 35 of the Act as admittedly, the conditions required for claiming the same under Section 35 was not satisfied by the Assessee. Nonetheless, the Assessee was entitled to claim the said expenditure in the "Residuary Provisions" of Section 37 of the Act. Section 37 permits such allowance of "Business Expenditure" incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X
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