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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 ..... of law. As such, we find that there was no fresh evidences as alleged by the revenue, which were entertained by the Learned CIT-(A) in violation of the provisions of Rule 46A of Income Tax Rule. Accordingly, we hold that there was no violation of the provisions of Rule 46-A of Income Tax rules. Product Development Expenses - Nature of expenses - Expenses are recurring in nature - 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 revenue in nature but subject to verification of the AO as held by the CIT-(A). Hence, we uphold the finding of the Learned CIT-(A). Thus, the ground of appeal of the Revenue is dismissed. - ITA No(s) 2270/Ahd/2018 , 2271/Ahd/2018 - - - Dated:- 10-11-2020 - SHRI RAJPAL YADAV , VICE PRESIDENT And SHRI WASEEM AHMED , ACCOUNTANT MEMBER Revenue by : Shri M. S. A. Khan , CITDR . Assessee by : Shri Nirmit Mehra , AR ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: Both the appeals have been filed by the Revenue for A.Ys. 2013-14 2014-15which are arising fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Learned CIT-(A) pointed out that there is no denial under the provisions of the Act for making the fresh claim during the appellate proceedings. The assessee in support of his contention referred to the order of the Hon ble Gujarat High Court in case of CIT vs. Mitesh Impex Ors (2014) 270 CTR 66 (Guj)and order of the Hon ble Bombay High Court in case of CIT vs. Pruthvi Brokers Shareholders (2012) 349 ITR 336 (Bom). 7. The assessee regarding its fresh claim of ₹ 3,47,32,310/- submitted that similar deduction was also made in the earlier years which was allowed by the ITAT in ITA Nos. 1337 1339/Ahd/2011 vide order dated 19th February 2016. Accordingly, the assessee contended that no capital assets or any benefit of enduring nature is arising out of the impugned expenses. Accordingly, it prayed to the Learned CIT-(A) to allow the claim of the assessee. 8. The Learned CIT-(A) admitted the fresh claim of the assessee by observing that the appellate authorities have been empowered to entertain the fresh claim made by the assessee which was not made before the AO during the assessment proceedings after relying on the judgment of Hon ble Gujarat High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled claim the benefit of such deduction before the higher authorities. In holding so we place our reliance on the judgment of Hon ble Gujarat High Court in case of CIT vs. Mitesh Impex Ors (2014) 270 CTR 66 (Guj)where it was held as under: 40. Therefore, any ground, legal contention or even a claim would be permissible to be raised for the first time before the appellate authority or the Tribunal when facts necessary to examine such ground, contention or claim are already on record. In such a case the situation would be akin to allowing a pure question of law to be raised at any stage of the proceedings. This is precisely what has happened in the present case. The Appellate Commissioner and the Tribunal did not need to nor did they travel beyond the materials already on record, in order to examine the claims of the assessees for deductions under sections 80-IB and 80HHC of the Act. 41. In the decisions that we have noted above, the Courts have considered such questions when a legal contention or a claim was based on material already on record but raised at an appellate stage. On such premise we wholeheartedly agree that the appellate authority and the Tribunal woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, have jurisdiction to deal not merely with additional grounds, which became available on account of change of circumstances or law, but with additional grounds which were available when the return was filed. The first part viz ., 'if the ground so raised could not have been raised at that particular stage when the return was filed or when the assessment order was made .' clearly relate to cases where the ground was available when the return was filed and the assessment order was made but 'could not have been raised' at this stage. The words are 'could not have been raised' and not 'were not in existence'. Grounds which were not in existence when the return was filed or when the assessment order was made fall within the second category viz., where 'the ground became available on account of change of circumstances or law.' [Paras 12 and 13] 17. The assessee, indeed made a fresh claim before the Learned CIT-(A) but did not file any fresh documents. Moreover, the Learned CIT-(A) after admitting the fresh claim directed the AO to allow the deduction of the same after verification and quantification of the expenses. Therefore, the AO is st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to ₹ 3,72,39,500/-, after verification, overlooking the fact that the Product Development Expenses were incurred for the purpose of development of new products and therefore the benefit of the expenditure extended to succeeding years and hence the expenses were capital in nature and could not be 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. 23. At the outset, we find that the facts of the case on hand are similar to facts of the in ITA No. 2270/Ahd/2018 relevant to A.Y. 2013-14 which has been decided by us in the favour of the assessee vide paragraph Nos. 16 to 20 of this order. Accordingly, we hold that the finding in the above mentioned paragraphs will be mutatis mutandis apply in the case on hand. For detail discussion refer the relevant paragraph. Thus, the ground of appeal of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X
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