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TMI Blog2020 (11) TMI 417X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed as revenue expenses. 2. The learned CIT(A), erred in admitting fresh issue during the appellate proceedings which is in contravention to the rule 46A, further the assessee did not claim Product Development Expenses as deduction at the time of computing the total income, neither claimed at the time of assessment proceedings, as he was of the view that these are not allowable expenses being revenue in nature." 3. The issues raised by the Revenue in ground No. 1 and 2 are interconnected to each other. Therefore we have clubbed both of them together for the sake of brevity and convenience. The issue raised by the Revenue is that the Learned CIT-(A) erred in directing to allow the deduction of the Product Development Expenses amounting to Rs. 3,47,32,310/- representing capital expenses, as revenue expenditure in violation of the provisions of Rule 46A of Income Tax Rule. 4. The facts in brief are that the assessee in the present case is a limited company and engaged in the business of manufacturing of automotive products. The assessee in the year under consideration filed the return of income declaring income at Rs. 84,10,370/- which was assessed under Section 143(3) r.w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. The Learned DR also submitted that the impugned expenditure is capital in nature. It is because the benefit of such expenses will arise over a period of time i.e. exceeding the period of one year. Thus, the same can be allowed as deduction over a period of time, the assessee will enjoy the benefit of it. Therefore, the same cannot be treated as revenue in nature. 13. On the other and the Learned AR before us submitted that the assessee can make a fresh claim before the Learned CIT-(A) despite the fact that the claim was not made by the assessee in the return of income. The Learned AR in support of his claim relied on the judgment referred in the order of the Learned CIT-(A). 14. The Learned AR, on the merit contended that claim of the assessee has already been allowed by the ITAT in the earlier Years. There is no any change in fact and circumstances of the case in hand from the case of the earlier assessment years. 15. Both the Learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 16. We have heard the rival contentions of both the parties and perused the materials available on record. The first controversy that aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nswer Questions (3) and (4) against the Revenue and in favour of the assessees in manner described above." We also find support and guidance from the order of the Hon'ble Bombay High court in case of CIT vs. Pruthvi Brokers & Shareholders (supra). The relevant finding of the court is reproduced as under: "From a consideration of decision of the Supreme Court rendered in the case of Jute Corpn. of India Ltd. v. CIT [1991] 187 ITR 688/[1990] 53 Taxman 85 , it is clear that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. They have the jurisdiction to entertain the new claim. They may choose not to exercise their jurisdiction in a given case is another matter. [Para 11] Further the observation of the Supreme Court in the case of Jute Corpn. of India Ltd. (supra ) to the effect 'if the ground so raised could not have been raised at that particular stage when the return was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used the material on record. In the present case, the issue is about allowability of product development expenses which were held by A.O. be a capital in nature. We find that ld. CIT(A0 while deciding the appeal for A.Y. 2002-03 and following it has given a finding that due to incurring of product development expenses, the installation capacity did not increase and assessee did not set up a separate and independent unit from manufacturing and no capital asset was brought into existence. He has further held that entries in the books of account wee not determinative of the allowability or otherwise of the expenditure. Before us, Revenue has not brought any material on record to controvert the finding of ld. CIT(A). In view of the aforesaid facts, we find no reason to interfere with the order of ld. CIT(A). 10. Thus, the ground of Revenue is dismissed." 19. Thus, we are of the view that such Product Development Expenses are recurring in nature. 20. We also note that the ld. DR has not brought anything on record suggesting that there was any benefit of enduring nature or any new assets coming into existence out of such expenses. Accordingly, we hold that such expenses are of reve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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